
Pass 

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63p Congress 1 SENATE P " 

1st Session / I J> o. 16 



SUGAR AT A SECOND 
GLANCE 



AN ARTICLE 

ON THE INFLUENCE OF OUR HIGH TARIFF 

ON SUGAR UPON THE ULTIMATE PRICE TO 

THE CONSUMER AND AS AFFECTING 

THE HIGH COST OF LIVING 



By 

FRANK C. LOWRY 



f 



PRESENTED BY MR. JAMES 
May 6, 1913.— Ordered to be printed 



WASHINGTON 
1913 



63d Congress ) a-cxr a rp^ / Document 

1st Session } SENATE j No 23 

SUGAR AT A SECOND 
GLANCE 



AN ARTICLE 

ON THE INFLUENCE OF OUR HIGH TARIFF 

ON SUGAR UPON THE ULTIMATE PRICE TO 

THE CONSUMER AND AS AFFECTING 

THE HIGH COST OF LIVING 



By 

FRANK C. LOWRY 




* 



PRESENTED BY MR. JAMES 
May 6, 1913.— Ordered to be printed 



WASHINGTON 
1913 







D. OF D, 
AY 29 1 






SUGAR AT A SECOND GLANCE. 

THE INFLUENCE OF OUR HIGH TARIFF ON SUGAR UPON THE ULTI- 
MATE PRICE TO THE CONSUMER AND AS AFFECTING THE HIGH 
COST OF LIVING. 



If protection to young industries was needed, it has been given. The initial stages 
of trial and unfamiliarity are certainly passed. The industry in the far West has 
quite passed the infant stage. Its difficulties in the farming region proper seem to 
be due to the competition of the other kinds of agriculture, which, under the typical 
American conditions, are more profitable. If this kind of agriculture needs protec- 
tion, and if the familiar grain-growing, cattle-fattening, and dairying of the corn- 
wheat belt do not, the explanation is still to be found in the principle of comparative 
cost. (F. W. Taussig, professor of economics, Harvard University.) 



Mr. Truman G. Palmer: An Appreciation. 

For the benefit of the many new Members of the House and Senate 
who may be unacquainted and uninformed, we wish to introduce the 
author of " Sugar at a Glance/ 5 to account for the appearance of this 
work in the form of a public document and to explain the exact 
occasion for Mr. Truman G. Palmer's interest in the subject of sugar. 

To begin with, he is not an expert in the employ of the United 
States Senate, as might be inferred, "at a glance," from Senate 
Document No. 890. He merely enjoys the privilege of intimacy 
with certain retiring Members of that body to whom on pressing 
occasions he furnishes information, " disinterested," but compatible 
with their standpat views which, in appreciation, they cause to be 
published and circulated as a public document (at the Government's 
expense). Nor is he wholly committed to the cause of the beet- 
sugar farmers, as might be taken for granted from the pronounced 
bucolic nature of his latest composition. In reality he is the secre- 
tary of the United States Beet Sugar Industry, a " voluntary" 
organization comprehending all of the principal beet-sugar com- 
panies of the United States with headquarters at 901-903 Union 
Trust Co. Building, Washington, D. C. This was formerly known as 
the American Beet Srgar Association and was recruited at Washing- 
ton several years fg by Henry T. Oxnard, the original beet-sugar 
"volunteer" and now vice president of the American Beet Sugar Co. 
The name was changed in order to avoid confusion with the company 
of its founder and to obviate the embarrassment of identification 
with the American Sugar Refining Co., or Trust (though all of the 
beet-sugar companies, in which the latter is most heavily interested, 
are members of this "patriotic" society). 

Mr. Palmer testified before the Hard wick committee that he had 
been in the employ of this "voluntary" oiganization since 1902, 
when, as a beet-sugar land patriot, he abandoned his fields in the 
West to appear at the Cuban reciprocity hearings to present his 

3 



4 SUGAK AT A SECOND GLANCE. 

" deadly parallel." That his earnest but futile endeavors attracted 
the attention of the Washington beet-sugar brigade, who then and 
there employed him to safeguard their interests, and, if forced, to 
resort to authorship again, which he forebore to do until driven to 
desperation by the House free-sugar bill. 

That his salary while engrossed at Washington was $10,000 per 
year, raised by " voluntary" contributions from the members of the 
" volunteer" organization; that he was allowed expenses besides 
while engaged in special services away from Washington; that he 
was the only salaried official, though there existed a " voluntary" 
executive committee, composed of such well-known beet-sugar 
" economists" around Washington (during sessions) as the before- 
mentioned Henry T. Oxnard, Charles C. Hamlin, vice president of 
the United States Sugar & Land Co., a company with a capitaliza- 
tion of $8,000,000, and but one beet-sugar factory at Garden City, 
Kans., with a daily slicing capacity of 900 tons (factory cost $900,000) 
and Thomas E. Cutler, ex-bishop of the Mormon Church, vice presi- 
dent of the Utah-Idaho Sugar Co. (in which the Trust owns a half 
interest); that he was employed in a legislative capacity at Wash- 
ington, principally to present the case of the beet-sugar interests 
"from an economic viewpoint" before congressional committees 
when the tariff on sugar was under consideration; but that he was 
in no sense a lobbyist; that when not thus preoccupied he found time 
to attend and address the Trans-Mississippi and National Irrigation 
Congresses for the purpose of influencing resolutions favoring the 
fostering of the beet-sugar industry through maintenance of a high 
tariff. His testimony to this effect may be found between pages 
2694 and 2702 of the Hardwick hearings. 

From the nature of his employment it must become apparent that 
the "economic viewpoint" entertained by Mr. Palmer is not alto- 
gether a disinterested one; but must of necessity have special refer- 
ence to the interests of the beet-sugar manufacturers and land pro- 
moters who seek to have the present "pork-barrel" tariff maintained 
for their exclusive benefit at the expense of the consumer without 
regard to the interest of the beet grower. What other "patriotic" 
impulse could move this "volunteer" organization to pay such a 
high price for the luxury of Mr. Palmer's services and publications ? 

Introduction. 

Knowing that sugar is too broad a subject to be covered "at a 
glance," and that a practical knowledge of any special phase of it 
can only be acquired through circumspect observation, "Sugar at a 
Second Glance" implies a closer scrutiny to the tariff aspects lost 
sight of in "Sugar at a Glance," and it is intended to be a comment 
upon, exposure of, and answer to this latest "vision" of the beet- 
sugar interests. 

In the explanatory letter, to be found on page 2 of his treatise, the 
author indulges in this "modest" self -recommendation: "Having 
exercised the utmost care in making and checking the various con- 
versions, I feel justified in stating that no substantial error has crept 
into the work." While this expresses the self-satisf action of the 
author with his effort, we accepted it as merely defining the limits of 



SUGAK AT A SECOND GLANCE. 5 

his knowledge and pursued our independent investigations with the 
result of having revealed to us in chart after chart and page after 
page not only where " substantial error had crept into the work," 
but also where willful misrepresentations had been attempted. 

In the first place, under the pretentious caption of " National 
Economy/' and "High Cost of Living/' " Sugar at a Glance" is a 
masquerade of the beet-sugar manufacturer and land promoter in the 
guise of the beet-sugar " economist" for the purpose of obscuring 
and evading the real issue of tariff revision. Their disguises and 
distractions are graphic representations of remote and imaginary 
" indirect benefits" to accrue primarily to the farmer and eventually 
to the public through encouragement to more extensive cultivation 
of £he sugar beet by maintenance of a high tariff. 

For themselves they prefer the more " direct benefits" that accrue 
from the maintenance of this special privilege legislation that enable 
the factory to buy sugar beets from the farmer on a free-trade or 
low-tariff basis and sell sugar to the consumer on a high-tariff basis. 
This has in the past enabled the beet-sugar factories to overcapitalize, 
to pay excessive dividends amounting in some cases to 35 per cent 
(Michigan Sugar Co.) and others to 100 per cent (Union Sugar Co.), 
or to accumulate a surplus of $9,000,000 in five years, after paying 
regular yearly dividends on preferred and common stock (a large 
part of which was originally water), a feat accomplished by the 
Great Western Sugar Co. of Colorado. 

Mr. Palmer conveniently abandons any attempt to justify our 
present high tariff on sugar, from the attractive but elusive theory of 
" equalizing the cost of production between home and abroad." 
The author well knows that the present " pork-barrel tariff rate" 
can not be defended upon that basis; hence, he presents arguments 
to divert attention from the real question at issue in the hope of 
leaving in the minds of his readers the impression that any material 
reduction made in the interest of the consumer would spell "ruin" 
to the domestic sugar industry, discriminate against the farmer, and 
indefinitely postpone solution of "the high cost of living" problem, 
while he claims acceptance of his doctrines would promote the direct 
interests of the factory, the indirect interests of the farmer, and 
eventually compensate the consumer by reducing the high cost of 
living through remote increases in crop yields. Even the familiar 
appeal "to be given 10 years more" is not touched upon. This old- 
time favorite was first introduced at the Cuban reciprocity hearings, 
appeared again before the Payne committee to ask for an extension 
of 10 years, in order to fulfill the former promise of "production of 
all sugar at home," but was too feeble or ashamed to present itself 
at the last hearings before the Senate Finance Committee, since 10 
years of high protection disclosed an increase of only 400,000 tons in 
domestic beet production, while domestic consumption increased 
nearly 1,000,000 tons. All past representations and favorites have 
now given place to this new discovery and panacea for "high cost of 
living" known as "indirect benefits." 

To indulge in a controversy over the indirect agricultural benefits 
to be derived through cultivation of sugar beets in rotation with other 
crops would carry us too far afield and away from the principal con- 
sideration of the effect of our high tariff upon the ultimate price to 



6 SUGAK AT A SECOND GLANCE. 

the consumer. Suffice to observe that these remote, " indirect 
benefits" do not materialize solely because of the planting of the 
sugar beet, but rather as a consequence of the condition in which the 
soil is left after employing the necessary intensified " horticultural" 
methods in its cultivation. This may be understood readily from the 
fact that England neither cultivates nor produces any sugar beets, 
yet oy application of the most effective, intensified methods of farm- 
ing and use of the most productive means in rotation upon her 
limited agricultural area forces her soils to yield more bushels of 
wheat, rye, barley, and oats per acre than do the fields of Germany 
on which the sugar beet is grown so extensively. This was effectively 
pointed out by Senator Williams in his speech on the sugar tariff in 
answer to Senator Lodge's "review" of Senate Document No. 890. 
It is highly improbable that England would have failed to have 
experimented with the sugar beet in her aim to secure the maximum 
yields or to have adopted their extensive cultivation and use did they 
prove either necessarily conducive or indispensable to the attainment 
of this end, as she had the further inducement of originating domestic 
sugar production; whereas now all the sugar she consumes is imported. 
The comparison of crop yields between the two countries, with the 
advantages in favor of England where no sugar beets are cultivated, 
demonstrates that intensified methods of farming, and not the use of 
sugar beets, are responsible for the increase. 

Moreover, we are inclined to question whether the sugar beet is 
responsible for the increase in crop yields of Germany to the extent 
and in the manner represented by Mr. Palmer. His claim is to the 
effect that Germany has more than doubled her yields per acre of 
wheat, rye, barley, and oats, solely through a system of rotation, 
one year in four, in connection with fields planted to sugar beets. 
Such a process would require one-fourth of the agricultural area of 
Germany to be planted in sugar beets annually. This area, according 
to Mr. Palmer's statistics, is 42,776,000 acres, one-fourth of which 
would be 10,694,200 acres. As a matter of fact only one-eighth of 
this allotted area, or 1,247,213 acres, is planted to sugar beets in 
Germany, from which is produced an average crop of about 2,500,000 
tons. Hence, the logic of the situation makes us rather skeptical 
about the actual application of the sugar beet in rotation with other 
crops in the manner assumed by Mr. Palmer, and inclines us to the 
belief that the adoption of more intensified methods of farming during 
recent years may be the more probable cause of these increased 
yields. 

Furthermore, he apparently overlooks the most important point; 
and that is, what might be entirely practical in Germany with an 
area of 209,000 square miles and a population of 65,000,000 would 
be most impractical in the United States, with an area of 3,025,600 
square miles and a population of 94,000,000. 

In order to reap the indirect benefits of the necessary crop rotation 
system alleged by Mr. Palmer to be practiced in Germany and to be 
responsible for the crop increases, it would be necessary to plant to 
sugar beets, annually, one-fourth of the 194,371,000 acres now 
planted to corn, oats, barley, wheat, rye, and potatoes in the United 
States, or 48,592,750 acres, which on the present basis of production 
of 600,000 tons from 500,000 acres, would result in a production of 



SUGAR AT A SECOND GLANCE. 7 

beet sugar in the United States of 58,308,000 tons, or more than three 
times the world's annual production of sugar, both beet and cane, 
would require 7,020 more beet-sugar factories to be erected, and a 
capitalization (based on the present basis) of the stupendous amount 
of $13,800,560,000. These preliminaries would have to be adjusted 
before the farmer could profit from the " indirect benefits," so allur- 
ingly pictured by Mr. Palmer. 

In 25 years we have extended our sugar-beet cultivation to 475,000 
acres. On the same basis, 2,500 years would be required to extend 
it to 48,592,750 acres. We beg to be excused from extending the 
calculations further so as to demonstrate the cost to the consumer. 
We are forced to these extraordinary calculations by adopting Mr. 
Palmer's impractical premises. 

We are prompted to inquire what the effect of the withdrawal of 
all this land from the cultivation of other crops would have on "the 
high cost of living." 

Thus it is apparent that so far as area is concerned there is no limi- 
tation to what could be done in the United States, but this shows 
how impracticable of application are Mr. Palmer's suggestions. All 
of this without reference to the most important fact that sugar beets 
require a large amount of hand labor as compared with other crops, 
and there are not sufficient field hands for our present agricultural 
needs. Besides, it is not proposed to interfere with the legitimate 
growth of the beet-sugar industry, as we will show later that the 
farmer does not receive the advantages of our high protective tariff, 
but is paid no more for his sugar beets, and, if anything, less, than the 
farmer in Germany who works under a low tariff rate. 

Meanwhile he, in common with other consumers, has been required 
to pay $130,000,000 more annually for his sugar supply, as a result 
of our high tariff. 

Again in chart No. 36, Mr. Palmer makes a comparison between 
the wheat yields per acre of the State of Minnesota and Germany, and 
shows that Germany raises 127,844,000 bushels of wheat on 4,316,400 
acres, while Minnesota raises but 67,600,000 bushels on 5,200,000 
acres. Now, in order to arrive at a same relative yield as that of 
Germany, one-fourth of the 5,200,000 acres, or 1,300,000 acres in 
Minnesota, would have to be cultivated to sugar beets each year. 
This is two and three-fifths times the total area now cultivated to 
sugar beets in the whole United States, and would mean a production 
in Minnesota alone of 1,560,000 tons annually, require the erection 
of 190 beet-sugar factories, in addition to the only one that is now in 
operation, and a capitalization of $360,000,000, in contrast with the 
present $1,200,000. If the area should be extended to North Dakota, 
Minnesota, and Kansas, to bring them up to the average of France, 
as represented by Mr. Palmer, in chart No. 37, then 4,168,000 acres 
annually would have to be planted to sugar beets, which would mean 
a yield of 5,004,000 tons of beet sugar annually, would entail an 
addition of 600 beet-sugar factories, where now there are only 2 
over the whole area, and a capitalization of $1,184,280,000, in con- 
trast to a present investment of less than $3,000,000. Then again, 
where is all the necessary labor to come from ? All of which deduc- 
tions illustrate the futility and impracticability of Mr. Palmer's 



8 SUGAR AT A SECOND GLANCE. 

theory and plan for the advancement of agriculture, for the purpose 
of increasing the prosperity of the farmer, and eventually relieving 
the consumer from the burdens of the high cost of living. 

In order that we may understand exactly the interest of the 
American farmer in the cultivation of sugar beets, let us call attention 
to the fact that the beet-sugar interests claim that, approximately, 
100,000 farmers (there are 10,000,000 farmers in the United States), 
are engaged in cultivating 474,000 acres devoted to sugar beets, 
making an average per farmer of only 4.74 acres. There are 
291,000,000 acres in the United States under cultivation in cereals 
and vegetables. 

Finally, the average crop yields of Austria-Hungary and France, 
where sugar beets are cultivated quite as extensively as in Germany, 
are much less than the latter, and in some instances, not much above 
the average yields of the United States. Why should this be the case, 
if the sugar beet alone is responsible for the increased yields ? 

Besides being impracticable, Mr. Palmer's u economic theories" 
have not worked out in actual experience. He repeatedly claims 
that, by increasing the area of beet-sugar cultivation, the average 
yields per acre of various crops would also be increased, and thus the 
high cost of living reduced. Between 1898 and 1911 the area culti- 
vated to sugar beets in the United States increased from 60,000 to 
500,000 acres; yet the average yields of cereal crops were less in 1911 
than in 1898, and the price of all foodstuffs has steadily advanced. 
If such an expansion has not tended to solve the vexing problem of 
the high cost of living, in accordance with Mr. Palmer's assurances, 
to what extent would this cultivation have to expand in order to 
bring about the desired relief ? 

" Sugar at a Glance" is more of a brief for the beet-sugar land pro- 
motion companies, than it is an argument for the beet-sugar factories. 
The reason for this is that the tariff can not be defended from a 
factory standpoint. A beet-sugar factory operates but three months 
in the year and is of but little value to the workingman. 

One never hears the contention made that a well-equipped beet- 
sugar "factory in the United States could not operate as cheaply as 
anywhere else in the world. The cost of labor does not enter to any 
extent into the factory's cost of operation. The claim is frequently 
heard that beet sugar must be very pure because it is not touched by 
a single human hand from the time the beet enters at one side of the 
factory until refined sugar is ready for delivery at the other side. 
So it is clear that the cost of labor does not play an important part 
in their process of manufacture. You will find in all their statements 
that the beet-sugar men confine their comparisons to statements 
along the following lines: "We must have a high tariff because we 
pay our watchman $2 a day and in Germany he receives only 50 
cents." This is immaterial; it is the labor cost per pound of sugar 
produced that counts, and this is less than 15 cents per hundred 
pounds. 

Fuel is an important item, and this, of course, is cheaper in the 
United States than abroad, particularly in our Western States, where 
oil is used. It is a well-recognized fact in the manufacturing busi- 
ness that the larger the production in a factory the lower the cost 



SUGAK AT A SECOND GLANCE. 9 

per unit, and the factories in the United States average considerably 
Larger than those abroad. 

Hence, this attempt to draw away the attention of Congress from 
consideration of the factory position, by graphic, picturesque descrip- 
tions of the promising but inapplicable agricultural side, to all appear- 
ances, for the exclusive benefit of the farmer, and poor consumer, 
but, in reality, in the direct interests of the beet-sugar land specu- 
lators, who make use of the tariff to exploit their schemes, and to the 
indirect profit of the beet-sugar factories, at an annual expense to 
the American people of $130,000,000 per year. 

Lastly, " Sugar at a Glance' 7 is replete with " substantial error," 
and actual and quasi misrepresentations. Familiar examples of the 
former are, the failure to properly represent the import and excise 
taxes of the various countries in chart No. 7, and in table on page 63; 
the failure to estimate the yields per acre of wheat, rye, barley, and 
oats in the United Kingdom in terms of the equivalent per bushel in 
Germany; contradictions in the prices alleged to be paid the farmer 
for his beets between table on page 22 and chart No. 31, and variance 
between these prices and the Government report; of the latter, the 
retail prices of Europe and the United States for July, 1911, repre- 
sented in chart No. 8 the attempt to apply deductions based upon 
the per capita consumption in 1901, of 69.7 pounds, to 1910, when 
the per capita consumption had reached 81.6 pounds, as in charts 
Nos. 6, 7, and 10; computations of the annual cost of the tariff to the 
consumer in chart No. 7; the cost of production of beet sugar alleged 
in table on page 22; the juggling of statistics and selection of special 
prices within convenient periods for the purpose of lc proving any- 
thing by statistics," rather than of emphasizing an actual or average 
condition as in charts Nos. 10, 18, and 19; combining the import and 
excise taxes, as in chart No. 7, and table on page 63, so as to convey 
the impression that the sum of the two represents the degree of pro- 
tection accorded abroad, instead of the import duties alone, in con- 
trast with our import rates of duty; the failure to make use of the 
statistics for the year 1911, especially with regard to the average 
wholesale and retail prices in the United States for sugar ; the approxi- 
mation of beet sugar company capitalization as $71,000,000 for the 
year 1909, in table on page 22, when it had already reached 
$130,000,000, and failure to state that this capitalization had reached 
$142,000,000 in 1911, though all sources of information were avail- 
able, as the work itself bears date of July 27, 1912. 

The purposes of the present volume are to meet remote, speculative 
theories with practical common-sense explanations and deductions; 
to controvert the " various conversions" that have been based upon 
the "substantial error" that has " crept into the work" and expose 
the evasions and many misrepresentations attempted by facts and 
statistics founded upon both experience and authority. Unmasked, 
" Sugar at a Glance" will appear as an attempt to distract the minds 
of Congress with a graphic moving-picture exhibition of remote " in- 
direct benefits" in the hope of deluding them into focusing their at- 
tention upon this latest discovery and of drawing it entirely away 
from the main consideration of the effect of our present high tariff 
upon the ultimate price to 94,000,000 of consumers, so that the beet- 
sugar manufacturers and land promoters may continue to prosper 



10 SUGAR AT A SECOND GLANCE. 

and plunder, through maintenance of a high rate of duty, at the 
expense of the public. In our endeavor to expose this latest des- 
perate expedient of the beet-sugar interests we nope to impress Con- 
gress with the advantages to be derived from "a second glance' ' at 
the subject of sugar, especially from a legislative standpoint. If the 
question of revision of the sugar schedule is approached in this delib- 
erate frame of mind, we have no fears of the ultimate decision to be 
reached between the merits of the high tariff, as depicted in " Sugar 
at a Glance," and the removal of the duties or a reduction in rates, 
so that they will not exceed one-half cent per pound on 96° raw 
sugar (equivalent to 20 per cent ad valorem), as revealed in " Sugar 
at a Second Glance." 



ANALYSIS OF CHARTS AND DATA PRESENTED BY MR. TRUMAN 
G. PALMER IN "SUGAR AT A GLANCE." 

[This work is intended to be read in connection with, so as to be compared with, 
"Sugar at a Glance." The charts and subjects referred to are contained in that 
volume. They are designated by number and page in this work, so as to correspond 
with the number and page in "Sugar at a Glance."] 

Chart Xo. 1. 

(Page 17.) 

Statistics are given in metric tons instead of in long tons, contrary 
to the custom of the trade, and figures are given for 1910-11, instead 
of 1911-12, though the latter were available since this work bears 
date of July, 1912. The chart merely emphasizes how fortunate is 
the United States in its sources of cane-sugar supply as distinguished 
from other large nations. 

Hawaii, Porto Rico, and the Philippines are referred to as " insular 
United States," while Cuba is classed as " foreign." Bringing this 
up to date, we find that the United States is not dependent upon 
" foreign" countries for its supply of sugar, in the general acceptance 
of this term. 

The consumption of sugar in the United States for 1912, according 
to Messrs. Willett & Gray, was 3,504,182 long tons. The estimates 
for the following crops in 1912-13 are: 

Long tons. 

Cuba 2,328,000 

Domestic beet 625, 000 

Hawaiian Islands 500. 000 

Louisiana (1912) 160. 000 

Philippine Islands. 200, 000 

Porto Rico 340,000 

Texas 10, 000 

Total 4, 163, 000 

By which it will be seen that the production of sugar inside our 
tariff wall now fully equals consumption. All of these producers 
have the advantage of the full height of our tariff wall, with the 
exception of Cuba, which is inside this wall to the extent of the 20 
per cent reduction, as a result of the reciprocity treaty of 1903. This 
island, adjacent to our shores, with interests so closely allied with 
those of the United States, has been favorably equipped by nature 
for the economical production of sugar and is able and willing to 
supply the United States with this sugar at a low cost, if it were 
not for the high tariff which enhances the price. 

Chart Xo. 2. 

(Page 17.) 

This forcibly illustrates how little the United States is dependent 
upon beet sugar, as compared with cane, for the year in question, 
462,500 tons of beet sugar being consumed, as compared with 2,851,000 

11 



12 SUGAK AT A SECOND GLANCE. 

tons of cane, and shows how utterly hopeless would be the situation 
and how high the price were its consumers dependent upon beet- 
sugar production in the United States. 

A comparative argument is therefore presented for a lowering of 
the duty in the interests of the consumers. 

Chart No. 3. 

(Page 17.) 

Has little relevancy to the situation in the United States. Here 
we are mainly dependent upon cane sugar, the ratio in 1910, the year 
adopted, being 7 pounds of cane to 1 of beet. Hence a world com- 
parison of the production of cane and beet sugar has little relation to 
the United States. The production of beet sugar is fostered where 
they are wholly dependent upon this source of supply, and cane is 
not available and its consumption confined to these countries un- 
fortunately isolated from cane supply. Hence the relative production 
of the two kinds is entirely immaterial, so far as throwing any light 
upon conditions in the United States is concerned. 

Chart No. 4. 

(Page 18.) 

Again based on metric tons instead of long tons, for the purpose of 
affording a proper comparison with actual conditions in the United 
States. This again forcibly illustrates how favorably situated is the 
United States for obtaining cane-sugar supplies both from its insular 
possessions and from Cuba, which is dependent upon us for a market. 
These are the supplies that the beet-sugar interests have always been 
anxious that Congress should discriminate against for their special 
benefit. 

In the past we have seen the fights which the domestic interests 
have made at various times against the free admission of sugar from 
Porto Rico, Hawaii, and the Philippines and the 20 per cent con- 
cessions made to Cuba. As some one remarked when the free sugar 
bill was passed by the House and the cry went up from the domestic 
industry that "ruination stared them in the face/' "we thought it 
was ruined." "We understood it was ruined when in 1898 Porto 
Rico sugars were admitted free of duty, and again when Hawaii 
sugars were admitted free, and again in 1903 when the 20 per cent 
concession was made on imports from Cuba, and again in 1909 when 
Philippine sugars were admitted free up to 300,000 tons annually." 

In spite of these dire predictions, there has been a steady increase 
in the beet-sugar production in this country, and factory profits have 
been very high, in some cases dividends of 100 per cent having been 
declared. Other companies are now paying dividends on an enormous 
amount of watered stock representing "capitalization of the tariff." 

Chart No. 5. 

(Page 18.) 

In order to make as good a showing as possible, Mr. Palmer now 
resorts to short tons in illustrating the growth of the beet-sugar 
industry in the United States. 



SUGAR AT A SECOND GLANCE. 13 

As an indication of what this means, let us point out that the 
domestic beet production in 1911 was 506,825 long tons, but this 
grows to 606,000 short tons under Mr. Palmer's method of treatment. 
Let us also point out that in spite of the very heavy tariff subsidy 
enjoyed by the beet-sugar industry its growth has fallen far short of 
equaling the increase in consumption. For our figures, we will adopt 
long tons, the basis of estimate employed by Willett & Gray: 



Consump- 
tion. 



Beet-sugar 
production. 



1898 

1911 

Increase in consumption 

Increase beet-sugar production . 



Tons. 

2,002,902 

3,351,391 



Tons. 
32, 471 

506,825 
1,348,489 

474,354 



Let us now estimate what the maintenance of the beet-sugar 
industry, up to a point where it supplies us with 15.51 per cent of 
our total requirements, has cost the American people. On page 13 
we show that since 1903, when the Cuban reciprocity treaty went into 
effect, the refiners' wholesale price has been increased, by reason of 
the duty, 1.603 cents per pound. Previous to that date the increase 
was greater, and it is clear that if the wholesale price is enhanced to 
this extent, the retail price is increased by a greater amount; never- 
theless, let us accept this figure, which can be regarded as a minimum, 
and we find that from 1898 to 1911 the price of sugar to consumers has 
been increased $1,368,774,292, and the total value of the domestic 
beet sugar produced during this period was $431,962,749. 

We might add that the revenue derived by the Government during 
this period from the tax on imported sugars amounted to $747,776,094. 

Chart No. 6. 

(Page 19.) 

Although Mr. Palmer does not see fit to g^ve the figures, statistics 
appear to show that sugar prices in the United States have reached 
a point where they begin to pinch, as the per capita consumption is 
not showing the increase that it should. 

According to Messrs. Willett & Gray, sugar statisticians, the per 
capita consumption in 1909 was 81.8; 1910, 81.6; 1911, 79.2; and 
1912, 81.3. For the six years previous (1903 to 1908 inclusive) the 
average increase in consumption was 3.80 pounds. 

A further reference to the figures for the per capita consumption in 
the United States forcibly illustrates the advantages to the con- 
sumers resulting from free trade on sugar. For example, in 1891, 
when the price of sugar declined in one week If cents per pound, as 
a result of the removal of the duty on sugar, consumption for that 
year increased 22.96 per cent over the preceding year. An increase 
of 20 per cent in our present consumption would be 700,836 tons. 
Consider what this increased business would mean to dealers, both 
wholesale and retail, canners, preservers, manufacturers, transporta- 
tion companies, warehouses, etc.; in fact all those who handle sugar 
in any way. 



14 SUGAR AT A SECOND GLANCE. 

Mr. Palmer's figures serve to illustrate that the consumption of 
sugar is almost universally governed by the price and that the per 
capita consumption of a nation is in proportion to the alternate price 
in thickly populated districts. For example, in Spain and Italy the 
per capita consumption is very low, owing to the internal taxes, and 
other conditions imposed. While in the United Kingdom, where all 
sugar is imported, and a duty of 40 cents per hundred pounds assessed 
with no internal revenue taxes imposed, the per capita consumption 
is relatively the highest, being 92 pounds. When the United King- 
dom admitted sugar free the per capita consumption just prior to the 
Boer War was 110 pounds. England imports her fruits and sugar 
and supplied the world with preserves, jellies, etc. The relatively 
high price of sugar in the United States operates to prevent its more 
general use in the manufacture of fruits and preserves of all kinds, 
and by adding to the cost of these articles, limits their consumption. 

While this is the greatest fruit-growing country in the world, our 
exports of jams, jellies, etc., are comparatively small, as we can not 
compete in neutral markets with countries like Great Britain, which 
has the advantage of cheap sugar. The removal of the tariff would 
greatly increase the consumption of these articles in many cases and 
canners would be able to purchase and preserve fruits that are now 
being wasted for lack of a market. 

Mr. Palmer is guilty of "substantial error" in representing the per 
capita consumption of sugar in the United States for the year 1910 
to be 79.2 pounds. According to Willet & Gray, the authority recog- 
nized and followed by the Government, it was 81.6. 

Mr. Palmer's statement that, of the per capita consumption of 
sugar in the United States for 1910, only 53.7 pounds were consumed 
directly by the individual and the balance of 25.5 pounds indirectly 
in products of manufacture, constitutes a most willful misrepresen- 
tation. 

The Eighteenth Annual Report of the Commissioner of Labor for 
the year 1903, under the heading of "Cost of living and retail prices 
of food," contains a computation on page 647 based upon statistics 
gathered in 1901 regarding the amount of sugar consumed by 2,567 
families scattered throughout the United States, whose average size 
was 5.31 persons and whose highest income was $891.82, and lowest 
$715.46. The average amount consumed annually by such a family 
was found to be 268.5 pounds. For the sake of convenience Mr. 
Palmer assumes the average size to be five instead of 5.31 persons, 
and by dividing 268.5 pounds, the amount consumed by the. entire 
family, by five, the assumed average size, he arrives at his magic 
figure of 53.7 pounds, as the amount of direct consumption. Having 
made this discovery in this manner, he assumes that it is to be the 
same for all time to come and attempts to apply it to the year 1910. 

Now the per capita consumption in the United States in 1901 was 
69.7 pounds and had reached 81.6 pounds in 1910. If 53.7 pounds, 
or 77 per cent, went into direct consumption in 1901, then but 16 
pounds, or but 23 per cent, remianed for indirect consumption. 
Applying the same percentage basis to 1910 we find that the direct 
consumption would be 62.83 pounds, instead of 53.7, and the indirect 
18.77 pounds, instead of 25.5 pounds, and the amount consumed by 
a family of five persons 314.15 pounds, instead of 268.5 pounds. But 
these estimates of direct and indirect consumption for either 1901 



SUGAK AT A SECOND GLANCE. 15 

or 1910 are necessarily unsatisfactory and inconclusive, inasmuch as 
they are confined to families of the most moderate means and exclude 
the well-to-do and wealthy families who consume relatively more 
directly. 

We wish to call particular attention to the insiduous nature of this 
misrepresentation as it is applied frequently throughout the volume 
and forms the very keystone in the construction of all Mr. Palmer's 
calculations regarding the unimportance of the annual cost of the 
tariff to the consumer. 

It even misled no less a personage than the keen and circumspect 
Senator Lodge, who accepted this basis as conclusive in estimating 
the annual cost of the tariff to the consumer in his memorable speech 
on the sugar tariff, though he makes the following surprising assur- 
ance in connection with the acceptance of this basis: "Thus taking 
the figures of the Bureau of Labor as correct, and my own personal 
investigation made before I knew them, confirms the official statis- 
tics." In the light of the actual statistics as quoted by the Bureau 
of Labor and the application made of them by Mr. Palmer, we are 
curious about the nature of the " personal investigation" conducted 
by the Senator that resulted in u confirmation " of such obviously 
erroneous deductions. 

As an example of the extremes to which the advocates of a high 
tariff will strain in order to minimize the importance of the cost of the 
tariff to the consumer, wish to call further attention to the testimony 
of Fred R. Hathaway, secretary of the Michigan Sugar Co., at the 
last hearings on the Sugar Schedule before the Senate Finance Com- 
mittee. He testified that of the 81 pounds of our annual per capita 
consumption of sugar but 30 pounds went into direct consumption 
and the balance of 51 pounds into indirect, in such products of 
manufacture as condensed milk, crackers, confectionery and chewing 
gum, and cited statistics attempting to account for the use of the 
entire 51 pounds in these products of manufacture. While working 
toward the same end, these two notable "authorities" seem to be 
very much apart. According to Mr. Hathaway's figures, assimilated 
to Mr. Palmer's methods of calculating the annual cost of the tariff 
to the consumer on the basis of 53.7 pounds per capita and a tariff 
cost of 1.346 cents per pound, the tariff would cost the individual 
17.33 cents less per annum than nothing at all, as the total cost would 
be but 41 cents, of which 58.33 cents would be the amount paid out 
in revenue, in accordance with Mr. Palmer's calculations in chart 
No. 7. For the future we suggest that two such celebrated "authori- 
ties" should compare notes so as to be more in accord in presenting 
the merits of their common cause. Mr. Hathaway's testimony will 
be found at page 675 of the printed volume of these hearings. 

But all of such calculations and deductions only serve to emphasize 
the futility of trying to separate the direct from the indirect consump- 
tion or estimate the relative cost of each. As the beet-sugar factories 
do not make any distinction between the individual and the trade in 
carrying on their business, conducting their sales, in estimating their 
average price and year's profits, why should any be attempted with 
the design of obscuring the actual cost of the tariff to the consumer ? 
After all, it is not the foim in which sugar is consumed, but the amount 
consumed, that controls in this later respect. So when our annual 
per capita consumption of sugar is 81.6 pounds and the annual cost 



16 SUGAE AT A SECOND GLANCE. 

of the tariff is 1.60 cents per pound, the total annual cost to the con- 
sumer in revenue to the Government and tribute paid to the domestic 
and tariff-favored sugar interests is $1.30 and to a family of five 
amounts to $6.50, instead of 13.95 cents, or 69.75 cents to a family of 
five in accordance with the calculations of Mr. Palmer in chart No. 7, 
and amounts in pounds per family to 408 instead of 268.5. 

Mr. Palmer seems to concede that there might be some impropriety 
in taxing the consumer for the benefit of the beet-sugar industry, but 
contends that none of the manufacturing industries in the "United 
States should complain because they are forced to pay tribute to the 
beet-sugar industry through the high price they must pay for their 
sugar and are thus badly handicapped. We do not agree with this 
theory that other industries should be handicapped for the special 
benefit of the beet-sugar industry. 

Furthermore, Mr. Palmer's claim that the reduction in the price of 
sugar, resulting from a reduction in the tariff, would not be reflected 
in the price to consumers of articles in which sugar is consumed indi- 
rectly, is erroneous. While this might be true of a slight reduction 
of the duty, it could not be true if a material reduction were made, 
because it is impossible to cut manufacturers' first cost without com- 
petition entering into the situation and taking care of a reduction in 
the price of the finished product. We do not have to resort to theory 
on this point, and will quote a letter received from a manufacturer of 
condensed milk, reading as follows : 

Philadelphia, Pa., November 27, 1912. 
Mr. F. C. Lowry, Secretary, 

138 Front Street, New York City. 

Dear Sir: Replying to yours of November 26, we beg to advise that approximately 

17 pounds of refined sugar enters into the manufacture of an average case of condensed 
milk. This, figured at If cents per pound, increases the cost of condensed milk per 
case by 27f cents. There are 48 cans to a case, and the cost to the manufacturer is 
therefore increased by more than one-half cent per can. This one-half cent could be 
saved to consumers were the sugar duty abolished. 

Yours, very truly, 

Hires Condensed Milk Co., 
H. C. Hooks, Secretary. 

Inquiries were also made among the candy manufacturers and it 
was found that those who handled bulk candies were in favor of free 
sugar, or a material reduction in the present rate of duty, while those 
who handled package goods were not so keen for it. This was not 
easily comprehensible at first, but when questioned further the pack- 
age-goods men said in substance: "Well, our industry is at present 
standardized. We have certain sizes of packages recognized all 
through the industry, we will say, to sell for 5 cents or 10 cents each. 
If you reduce the price of sugar, we will have to give a larger package 
for 5 cents or give our present 5-cent package for less money. That 
would mean a reorganization of our business and a lot of trouble." 

Thus you will readily see that the consumer would get all the benefit 
from a reduction in the duty on sugar. 

On this point we would like to refer to the testimony of Mr. Willett, 
of Willett & Gray, before the Hardwick committee (pp. 3554 and 
3547) : 

Mr. Willett. I would like to have the committee satisfied that any reduction of 
duty goes to the consumer and any addition of duty is paid by the consumer in any 
year under any duty which differs from any other duty, making necessary allowances 
for market fluctuations affected by supply and demand. 



SUGAK AT A SECOND GLANCE. 17 

And on page 3547 we find this statement: 

Mr. Willett. All the analyses of changing from duty to free sugar show that when- 
ever duty is taken off the cost of refining decreases and when the duty is added the 
cost of refining increases, but these analyses also show that whenever duty is taken off 
the consumer gets the full benefit of the amount of duty taken off and also a part of 
the lower cost of refining, and whenever the duty is increased the refiners bear a cer- 
tain portion of the increase and the consumer does not pay the full addition of the 
duty. 

Mr. Willett further made some calculations to prove the correctness 
of his statements. 

Chart No. 7. 

(Page 20.) 

This presents a striking example of the desire of the beneficiaries of 
the present high tariff on sugar to mislead the public in order that 
they may continue to reap, at the expense of the consumer, the bene- 
fits of this special-privilege legislation. 

The import duties and excise tax, or internal-revenue tax, are 
lumped together instead of given separately. This is for the purpose 
of conveying the impression that the total of the two taxes represents 
the degree of protection accorded to the beet-sugar industry abroad, 
and by such subterfuges attempt to prove that sugar in the United 
States is neither subjected to a heavy tax nor is accorded an unusually 
amount of protection. This is not a fact. The import duties pre- 
vailing in Germany, France, Belgium, and Austria, the largest beet- 
sugar producing countries in the world, according to the terms of the 
Brussels convention, are 52 cents per hundred pounds on refined and 
47 cents per hundred pounds on raw sugar, and these duties represent 
the extent of protection accorded that industry. This is in contrast 
to an import and protective duty in the United States of $1.90 per 
hundred pounds upon refined sugar, $1,685 upon imported 96° raw 
sugar, and $1,348 upon Cuban raw sugar of 96° test in the United 
States, where no internal-revenue taxes on sugar are in effect. In 
Europe both the imported and domestic sugars must respond to the 
payment of the excise tax, which is assessed in addition to the import 
duty, as mentioned above. 

So as to make this point clear, we will take Germany as an example. 
Mr. Palmer has compared the total tax on refined sugar, $2.03 per 
hundred pounds, with the protective rate in the United States upon 
refined sugar of $1.90. Refined sugar entering Germany is required 
to pay a duty of 53 cents per hundred pounds. (This is the protective 
rate.) In addition, it is required to pay $1.50 per hundred pounds 
internal-revenue tax, making the total tax paid before going into con- 
sumption $2.03 per hundred pounds. But this is not the protective 
rate, as all the sugar produced in Germany before going into consump- 
tion must also pay this internal-revenue tax of $1.50 per hundred 
pounds, so as to contribute to the public revenue. It is therefore 
apparent that the protective rate is represented only by the difference 
between the two taxes. 

Per 100 pounds. 

German tax on imported sugars $2. 03 

German tax on domestic sugars 1. 50 

Difference, or protective rate 53 

in contrast to $1.90 in the United States. 
S. Doc. 23, 63-1—2 



18 SUGAR AT A SECOND GLANCE. 

Similar conditions exist in other European countries, the import 
tax showing little or no variation, with the exception of Russia, Spain, 
and Italy, the difference being in the internal-revenue taxes, which 
run as high as $3.50 per hundred pounds in Austria-Hungary. 

It will be noted that our beet-sugar factories now have about three 
and one-half times as much protection as those of Germany, France, 
and Austria-Hungary, the largest beet-sugar producing countries in 
the world, outside of Russia. The domestic beet-sugar producers 
make much of the fact that at one time the countries of Europe gave 
a direct bounty to beet-sugar manufacturers. In the old days when 
this was done the bounty only amounted to 25.9 cents per hundred 
pounds in Germany, 13.7 cents in France, and 20.3 cents in Austria, so 
it will be seen that if, in addition to the protective tariff, the European 
countries were still giving direct bounties similar to the above, the 
total subsidy, direct and indirect, would be less than half that now 
granted by the United States. 

With reference to the note appearing on page 20, quoting from the 
Finance Committee's report (Republican) on the House free-sugar 
bill, let us point out that this calculation on saving to consumers is 
based on false assumption. In the first place, they assume an indi- 
vidual consumption of 53.7 pounds and are pleased to take for granted 
that the saving to the consumer would only be this amount multiplied 
by 1.34 cents, the alleged average rate of duty paid in 1911 on impor- 
tations of raw sugar. The amount of revenue collected from sugar 
in 1911 was $52,496,559. If we multiply the amount of duty-paying 
imported sugar — to wit, 1,608,318 long tons — by 1.34 cents per pound, 
the alleged average rate, we get about four and a quarter million 
dollars less than the amount actually collected on sugar during that 
year, which proves that the assumption is intrinsically wrong. 
There is no such rate as an " average rate of 1.34 cents per pound. " 
The minimum rate of duty in the United States is on importations of 
sugar from Cuba and is 1.348 cents per pound for 96°-test raw sugar, 
which is the standard basis of test. 

We can find out exactly the extent to which refiners' prices have 
been advanced, as a result of the tariff. 

In recognition of our moral obligations to Cuba, a reciprocity 
agreement with that island was concluded on December 28, 1903, by 
which in return for concessions made to our imports we agreed to 
allow the entry of Cuban sugar at 20 per cent under the full tariff 
rates, or upon the basis of 1.348 cents per pound for 96°-test raw 
sugar. 

This was done for the purpose of stimulating in Cuba the develop- 
ment of their principal product by affording a certain market and 
thus assisting her toward the establishment of a settled form of 
government founded upon a sound financial basis. Any intention of 
lowering the price to the American consumer was not involved. 

Since this reciprocity agreement, however, an impression has been 
spread abroad by opponents of tariff reduction that the real basis of 
protection to be considered is now the Cuban rate of 1.348 cents 
instead of the full rate of 1.685 cents per pound on raw sugar, or 1.90 
cents on refined. What gives rise to this supposition is the fact that 
almost all of the duty-paying raw sugars which comprise half of our 
importations come from Cuba, and since they are allowed to enter upon 
the basis of 1.348 cents per pound they must be sold at a lower duty- 



SUGAK AT A SECOND GLANCE. 19 

paid price than the in-bond price of foreign sugar, plus the full duty. 
Let us show how this does not necessarily follow. 

Taking the record of the Department of Commerce and Labor, 
Bureau of Statistics, No. 240, page 517, it shows that the average 
cost per pound, free on board in foreign countries, of the raw sugar 
imported 1905-1911, inclusive, was 2.378 cents per pound. To this 
we must add the freight to get the average cost laid down at United 
States ports, 0.14 cent, making the in-bond price at United States 
ports 2.518 cents. During these seven years the margin between 
the price paid by refiners for their raw material and the selling price 
on refined was 0.859 cent per pound. If refiners did not have to pay 
any duty and added this margin to the in-bond price of the raw 
material, 2.518 cents per pound, it would have made their average 
selling price for these seven years 3.377 cents per pound. Willet & 
Gray show that the average New York refiner's price for these years 
was 4.98 cents, or an increase by the tariff of 1.603 cents per pound, 
for which the tariff is alone responsible. 

The following is Mr. Palmer's method of arriving at "the gross 
annual saving," "the annual loss in revenue," and "the net annual 
gain," per capita, in this chart. The direct per capita consumption 
of sugar is assumed to be 53.7 pounds (though on p. 51 it is assumed 
to be 59.92 pounds). Then the average cost to the consumer, by 
reason of the tariff, is assumed to be 1.346 cents per pound, which is 
lower even than the very lowest rate collected upon our imports of 
sugar — namely, the Cuban rate of 1.348 cents per pound. Tnen this 
53.7 pounds is multiplied by 1.346 cents in order to arrive at the total 
cost to the consumer, which results in 72.28 cents. But, from this 
the amount collected in revenue is to be deducted, so Mr. Palmer 
divides $52,445,000, the amount of revenue collected on sugar in 
1910, by 90,000,000, the total population of the United States, 
though 53.7 pounds represents only 68 per cent of the total per capita 
consumption, and ascertains, by this manner of division, that the 
revenue collected costs the consumer 58.33 cents per annum, which 
he deducts from 72.28 cents, thus leaving a net annual cost to the 
consumer of only 13.95 cents, by reason of the tariff on sugar. 

Now, this method is faulty and subject to criticism in many respects, 
but principally because the cost of the tariff to the consumer annually 
is more than double the amount collected in revenue, because less than 
one-half of the sugar we consume pays any duty and the domestic 
and tariff-favored interests, inside our tariff wall, take advantage of 
the duty levied upon the imported half to increase their price to the 
full extent of the amount levied upon the duty-paying imported 
sugars. Hence, even upon Mr. Palmer's method of calculation, the 
cost to the consumer should be twice the amount assessed against the 
consumer for revenue, or $1.17, plus the 13.95 cents, which would 
amount to $1.31 in all, instead of 72.28 cents, which amount corre- 
sponds with our views regarding the annual cost of the tariff to the 
consumer. 

Chart No. 8. 

(Page 21.) 

The purpose of this comparison of Mr. Palmer is doubtless to 
convey the impression that the producer in the United States receives 
less for his product than the producer abroad. If this is true, then, 



20 



SUGAK AT A SECOND GLANCE. 



it is apparent that the producer in the United States needs no pro- 
tection from his foreign competitor. But Mr. Palmer knows that 
this is not a fact, and so in a concluding note he refers to an internal- 
revenue tax (that increases the price) of 1 to 8 cents a pound which is 
levied abroad both on domestic and imported sugar. 

This is the tax he failed to mention when compiling chart No. 7, 
where he attempted to show that the protection afforded to the 
industry in the United States, as compared with other countries, was 
not particularly high. We are, however, glad to see that Mr. Palmer 
now considers that the protective tariff abroad is " sufficiently large 
to protect the domestic sugar from competition with tropical sugar." 
This is in accord with our ideas. The writer recommended a tariff 
of 60 cents a hundred on raw sugar of 96° test in contrast to the 
present "pork-barrel" rate of $1,685 per hundred. In other words, 
our recommendation was nearly 29 per cent higher than the rate of 
47 cents charged by the countries of Europe, the protective rate that 
Mr. Palmer terms " sufficiently large." 

In order to raise sufficient revenue to support a large standing army 
and other expenses that do not fall on the Government of the United 
States, European Governments have seen fit to require their producers 
to pay a heavy internal-revenue tax on sugar. This, of course, ad- 
vances the price to the consumer to the extent of the tax, which, for 
example, is in Germany 1.51 cents per pound, Austria 3.50 cents per 
pound, and France 2.53 cents per pound. 

And so if we are to compare the position of the domestic producer 
in the United States with the domestic producer in these foreign 
countries the internal-revenue tax should first be deducted from the 
price at which sugar is sold. If this is done, we find that in July, 1911, 
the retail price abroad was the following: 



City. 


Retail price 
July, 1911. 


Excise tax. 


Retail price 

less excise 

tax. 




Cents. 
4.90 
4.90 
5.90 
6.10 


Cents. 
1.51 
1.51 
2.53 
2.53 


Cents. 
3.39 




3.39 




3.37 


Marseille 


3.57 







while the retail price in the United States, where the domestic pro- 
ducers did not have to pay any internal-revenue taxes, was fully 6.35 
cents based on the average refiner's quotation in New York for July 
of 5.35 cents. 

The theory of the domestic producer in the United States seems to 
be that if consumers are getting their sugar at as low a price as con- 
sumers in Europe they should not complain — even if it is true that the 
high price abroad is due to taxes levied and collected by the Govern- 
ment, whereas in the United States the high price is due to the tax 
levied only on the imported half of our sugar by the Government, 
but collected by the domestic producer, or tariff-favored interests, on 
the balance. In other words, when the internal-revenue tax is 
placed on sugar in Europe the Government receives all the benefit. 
When a high import tax is placed on sugar in the United States, the 
Government derives revenue only from that half of the sugar we 



SUGAR AT A SECOND GLANCE. 



21 



consume that is imported and the domestic producer profits to the 
same extent on the half of our consumption that is produced inside 
our tariff wall. 

Now let us see how Mr. Palmer's figures misrepresented the situ- 
ation abroad: 

These prices purport to be taken from " quotations gathered by the 
State Department from American consuls in Europe." We herewith 
submit the exact list of prices so gathered in order to show not only 
that some of these prices are incorrectly quoted, but also that the 
prices of the various countries are misrepresented and that, with few 
exceptions, the very highest quoted are adopted for the European 
countries and the very lowest, New York, for the United States; 
also, that the price of loaf sugar is quoted in some instances, instead 
of granulated, to be compared with refined granulated in the United 
States, where loaf sugar sells I cent to 2 cents per pound above 
granulated . 

Statement showing the comparative retail prices of sugar per pound in foreign countries, 

July, 1911. 

[Compiled by the Bureau of Trade Relations, Department of State, from Consular Reports.] 



Countries and cities. 



July, 1911. 



Description of grades of sugar 
to which prices apply. 



Great Britain: 

London 

Liverpool 

Manchester 

Leeds 

Glasgow 

Dublin 

Germany: 

Berlin 

Hamburg 

Magdeburg 

Nuremburg 

Cologne 

Frankfc rt-on-the-Main 

Breslau 

France: 

Paris 

Marseille 

Bordeaux 

Nantes 

Lyon 

Roubaix 

Italy: 

Rome 

Naples 

Genoa 

Venice 

Milan 

Austria-Hungary: 

Vienna 

Budapest 

Carlsbad 

Prague 

Trieste 

Russia: 

Moscow 

Odessa 

Riga 

Warsaw 

Switzerland: 

Geneva 

Zurich 

St. Gall 

Berne 

The Netherlands: 

Rotterdam 

Amsterdam 



Cents. 



4.0 
4.0 
3.8 
4.1 
4.5 
4.1 

4.9 
5.9 
4.9 
5.0 
4.7 
5.2 
5.2 

5.9 
6.1 
6.8 
5.9 
6.5 
6.6 

14.0 
14.0 
14.5 
14.5 
11.7 

6.5 
6.8 
8.4 
7.3 

8.9 

8.3 
7.4 
8.6 
7.2 



Granulated. 

Do. 

Do. 
English cane (granulated). 
Granulated. 
Crystals (Tate's twos, etc.). 

Fine soft white, second quality. 
Granulated (refined). 

Do. 
Crystal powdered. 
Grade in general use. 
Loaf (Brode). 
Refined I coarse grain. 

No. 3, white crystallized. 

Do. 

Do. 
Loaf. 
Granulated. 

Do. 

Centrifugal (refined). 

Do. 

Do. 
Refined. 

Do. 

Crystal. 
Granulated. 

Do. 
Cones (refined). 
Squares and cubes. 

Refined in loaves. 

Do. 
Loaf. 
White crystal. 

Pounded, refined. 
Loaf granulated. 
Best white. 
Loaf in sacks. 

Refined. 

White refined superior. 



22 



SUGAK AT A SECOND GLANCE. 



Statement showing the comparative retail prices of sugar per pound in foreign countries, 

July, 1911 — Continued. 



Countries and cities. 



Belgium: 

Brussels 

Antwerp 

Liege 

Denmark, Copenhagen. 
Sweden: 

Stockholm 

Gothenburg 

Norway: 

Christiania 

Bergen 

Spain: 

Valencia 

Madrid 

Malaga 

Jerez de la Frontera 

Seville 

Turkey, Constantinople 
Boumania, Bucharest. . 
Greece: 

Athens 

Patrias 

Servia, Belgrade 



Description of grades of sugar 
to which prices apply. 



Cents. 
5.4 
7.0 
4.8 
5.0 


Refined in grains. 
White powdered. 
Crystallized in bags. 
White granulated. 


8.0 

7.7 


Refined granulated. 

White household granulated. 


6.3 
6.3 


Granulated glebe white. 
Do. 


8.7 
12.2 

9.4 
11.9 
10.5 

5.1 
10.1 


Refined lump. 

Loaf. 

Refined white cane blocks. 

Cane loaf. 

Cut loaf. 

Trieste square sugar. 

Loaf and granulated. 


11.4 
12.3 

8.7 


Austrian lump. 
Al fine white. 
Grade in general use. 



In contrast the average retail price for July in the United States 
was not less than 6.35 cents per pound. 

Differences in grades make comparisons difficult, but from the 
above list of prices it will be seen that the retail price of sugar is 3.8 
cents per pound in Manchester, 4 cents per pound in both London and 
Liverpool, 4.1 cents per pound in Dublin and Leeds, and only 4.5 
cents per pound in Glasgow. These constitute all the cities quoted 
in the above list. At no place in the United Kingdom was the retail 
price of granulated sugar as high as 5 cents per pound, as represented 
by Mr. Palmer; the average retail price for all six places being but 
4.08 cents per pound. 

The price for Germany is represented to be 5.9 cents per pound. 
This is the quotation for Hamburg, the very highest reported out of 
seven cities in Germany. Berlin and Magdeburg were each a cent a 
pound below this quotation, namely, 4.9 cents, and Cologne 4.7 cents 
per pound. The average retail price of all German cities was 5.14 
cents per pound as compared with 5.9 cents per pound represented 
here. The retail price for Switzerland is represented to be 5.1 cents 
per pound, which is the price quoted for loaf sugar at Zurich and is 
the very highest reported out of four cities, Geneva being 4.4 cents 
per pound, and Berne, 4.2 cents, with an average retail price for 
Switzerland of 4.65 cents per pound, despite two quotations for loaf 
sugar. In the United States loaf sugar is quoted one-fourth to 2 cents 
per pound above granulated and in Europe the price for loaf above 
granulated varies from one-eighth to three-fourths of a cent per 
pound. The retail price for the Netherlands is given as 8.7 cents per 
pound, this being the Amsterdam quotation, while Rotterdam is 8.2 
cents per pound, showing an average for the Netherlands of 8.45 cents 

ger pound instead of 8.7 cents per pound. The retail price for 
Belgium is represented to be 5.4 cents per pound, Brussels, while Liege 
is 4.8 cents, the quotation of Antwerp being for powdered sugar, which 
is more expensive than granulated. The price for Sweden is repre- 
sented to be 8 cents per pound, this being the Stockholm quotation, 



SUGAR AT A SECOND GLANCE. 23 

while Gothenberg is 7.7 cents per pound. The price for Spain is 
represented to be 12.2 cents per pound, this being the extreme price 
for that country at Madrid. Valencia being 8.7 cents per pound, 
Malaga 9.4 cents per pound, while the other two cities quoted are 
lower than Madrid. The retail price for the United States is alleged 
to be 5.7 cents per pound. This is arrived at by assuming that the 
New York wholesale price for July, 1911, was 4.90 cents per pound, 
to which was to be added 0.79 cent per pound ascertained as the 
average cost of distribution in New York between 1890 and 1907 by 
the Bureau of Labor. Now, the period between the last day of June 
and the first day of October in 1911 was an abnormal one in the history 
of the sugar trade. The New York wholesale price for granulated 
started at 5 cents per pound on June 29, and reached 5.65 cents per 
pound by July 31. The average for the whole month was 5.35 cents 
per pound. To this it is customary to add fully 1 cent per pound to 
allow for cost of distribution, including wholesalers' and retailers' 
profits, in order to arrive at an average retail price for the whole of 
the United States. If we follow out this method, the retail price for 
the month of July, 1911, would be 6.35 cents per pound instead of 
5.69 cents per pound, as represented here. In contrast to an allow- 
ance of 0.79 cent per pound for cost of distribution in arriving at the 
representative retail price for the whole United States in this chart, 
in chart No. 24 Mr. Palmer makes an allowance of 0.875 cent per 
pound, and in chart No. 13 he admits to a New York wholesale price 
for granulated of 5 cents per pound on June 29, 5.10 cents per pound 
on July 6, and 5.45 cents per pound on July 27, 1911, but he now 
chooses to assume a price of 4.90 cents per pound for July, 1911, in 
arriving at this alleged retail price of 5.7 cents per pound for the whole 
United States during July, 1911. 

It is only by selecting these very highest prices and including such 
countries as Italy, where the retail price is 14 cents per pound, of which 
8.67 cents represents taxes; Spain, 12.2 cents per pound, of which 7 
cents represents taxes; Greece. 11.04 cents, of which 7.9 cents is 
taxes; Portugal, 10.3, of which 7.26 cents is taxes; and Bulgaria, 10.1 
cents, of which 6.56 cents is taxes, that he arrives at his average retail 
price for all Europe, 7.8 cents per pound, and alleges an average for 
the whole United States, 5.69 cents per pound. Now, the only fair 
way to arrive at a proper comparison is to deduct the combined taxes 
of these various countries from the retail price and then compare the 
result with the average American price, less 1 .6 cents per pound, the 
amount by which it is increased by reason of the tariff according to our 
calculations, or by 1 .34 cents per pound, the amount claimed by Mr. 
Palmer, that the American price is increased by reason of the tariff. 
By such a method of comparison we would have an American average 
retail price for July, 1911, of 4.75 cents per pound, in accordance with 
our contention, and 5.01 cents per pound in accordance with Mr. 
Palmer's view, to compare with the following European retail prices. 



24 SUGAE AT A SECOND GLANCE. 

European and American retail prices for sugar during July, 1911. 





Import and 


Retail price 


internal- 


per pound. 


revenue 
taxeslevied, 




per pound. 


Cents. 


Cents. 


4.00 


0.40 


4.00 


.40 


3.80 


.40 


4.90 


2.03 


5.90 


2.03 


4.90 


2.03 


4.70 


2.03 


5.90 


2.89 


6.10 


2.89 


6.80 


2.89 


6.50 


2.89 


14.00 


8.67 


6.50 


4.02 


6.80 


4.02 


4.40 


.79 


5.10 


.79 


4-20 


.79 


8.20 


4.92 


8.70 


4.92 


5.40 


2.27 


4.80 


2.27 


5.00 


1.71 


12.20 


7.00 


8.00 


3.70 


7.70 


3.70 


5.10 


.25 


10.30 


7.40 


11.40 


7.90 


10.10 


6.56 


8.70 


5.26 


6.30 


2.43 


7.20 


4.69 


6.35 


1.60 


6.35 


1.34 


6.35 


1.44 



Retailprice, 

less taxes 

levied, per 

pound. 



London 

Liverpool 

Manchester 

Berlin ,... 

Hamburg 

Magdeburg 

Cologne 

Paris 

Marseille 

Bordeaux 

Lyon 

Rome 

Vienna 

Budapest 

Geneva 

Zurich (loaf) 

Berne 

Rotterdam 

Amsterdam 

Brussels 

Liege 

Copenhagen 

Madrid (loaf) 

Stockholm 

Gothenberg 

Constantinople (loaf) 

Lisbon 

Athens (loaf) 

Bucharest 

Belgrade 

Christiania 

Sofia (loaf) 

United States 

Do 

Do 



Cents. 
3.60 
3.60 
3.40 
2.87 
3.87 
2.87 
2.67 
3.01 
3.21 
3.91 
3.61 
5.33 
2.48 
2.78 
3.61 
4.31 
3.41 
3.28 
3.78 
3.13 
2.53 
3.29 
5.20 
4.c0 
4.00 
4.85 
2.90 
2.50 
3.45 
3.44 
3.87 
2.51 
U.75 

2 5. 01 

3 4.91 



1 Lowry. 



2 Palmer. 



3 Willett. 



Of course the deductions made for the United States do not apply 
to domestic sugar. 

By such a method of comparison it appears that the retail price in 
the United States, despite the advantage it possesses of abundant 
sources of cane and beet-sugar supplies, was the highest of any place 
in the world except Rome and Madrid, where sugar is regarded as a 
luxury and where the general use of it is almost prohibitive on account 
of the price and where the per capita consumption is lower than any 
other country in the world. 

These prices were based upon the retail prices of granulated sugar 
abroad, and Mr. Palmer's deductions are based solely upon quotations 
for granulated. Hence a discussion about loaf sugar in connection 
with such comparisons is entirely beside the question. 

Chart No. 9. 

(Page 22.) 

According to Willett & Gray, the per capita consumption in 1890 
was 54.56 pounds, instead of 50.7 pounds, as represented in this chart; 
and in 1900 66.6 pounds, instead of 58.9 pounds; and in 1910 81.6 
pounds, instead of 79.9 pounds, as here represented. 



SUGAR AT A SECOND GLANCE. 25 

In 1891 it was 67.46 pounds. This was the first year of free raw 
sugar and shows an increase of 22.96 per cent over 1890, the year that 
Mr. Palmer selected for his purposes. Seven yeais later, in 1898, it 
had dropped to 60.3 pounds, during which year the effect of the pres- 
ent tariff rates began to be felt. In 1899 it was 61 pounds; in 1894 
it was 66.64 pounds; 1895, 64.23 pounds. The effect of the rate fixed 
in the Wilson bill of 40 per cent ad valorem was then beginning to be 
reflected in the consumption. This was more noticeable in 1896, when 
the per captta consumption had fallen to 60.9 pounds. In 1897, the 
year the present rates went into effect, the annual per capita consump- 
tion was 63.5 pounds, which in 1898 had dropped to 60.3 pounds. All 
of these figures illustrate to what extent the consumption of sugar is 
affected by the tariff. As a matter of fact the per capita consumption 
in 1900 was 0.86 of a pound less than in 1891, when the period of free 
raw sugar went into effect, thus showing that an increase in consump- 
tion during a period of nine years was altogether negatived by increases 
in the tariff. 

Mr. Palmer did not make use of the reliable figures of Willett & 
Gray, though they were available, and are the authority in the United 
States. He was also careful to select convenient periods, so as to show 
contrasts that would support his argument without taking into con- 
sideration the various tariff changes. 

Chart No. 10. 

(Page 22.) 

We call your attention to the fact that the prices quoted are not the 
prices consumers pay for their sugar. They are the New York whole- 
sale prices as quoted by refiners. As the New York price now is the 
lowest price of anywhere in the United States and has been for the last 
25 years, to arrive at an average price to the consumer fully 1 cent per 
pound would have to be added to this figure. The periods of 1870 and 
1880 are too remote to afford any correct basis of comparison with 
prices of the present day. Those prices were largely governed by 
tariff conditions and supply and demand. 

Mr. Palmer selects convenient 10-year periods in order to mislead. 
Now, in 1890 there was a duty of 2.24 cents per pound upon 96° test 
raw sugars, which Was entirely eliminated in 1891. Hence the price 
in 1890 was affected to the extent of 2.24 cents per pound by the duty. 
To illustrate the effect of the removal of the tariff, the wholesale price 
in 1891 declined If cents per pound in one week. As the effects of the 
removal became apparent the price dropped to 4.346 cents per pound 
in 1892, 4.12 cents in 1894, and 4.15 cents in 1895 as the immediate 
result of the removal of the duty. The price in 1900 selected for com- 
parison is the very highest in the 20-year period between 1890 and 
1910 and is only exceeded by the average wholesale New York price 
for the year 1911, which was 5.345 cents per pound, which Mr. Palmer 
was careful not to mention, though the data was available, for fear he 
might upset his argument and charts. Now, the average price for the 
20 years between 1891 and 1910, inclusive, was 4.718 cents per pound, 
which shows that in 1910 the cost of sugar was 28 cents per 100 pounds 
above the average price for 20 years, and rather explodes the claim for 
reduction due to domestic production. We print herewith the New 



26 SUGAE AT A SECOND GLANCE. 

York wholesale prices for granulated sugar from 1891 to 1911, inclu- 
sive, showing that the price in 1911 was the highest during that period 
and that the price used by Mr. Palmer for his purposes of comparison 
in order to illustrate a reduction was the highest during that 20-year 
period with the exception of 1900, 5.32 cents; 1901,5.05 cents; 1905, 
5.256 cents; and 1911, 5.345 cents. The following are the New York 
wholesale prices: 1891, 4.641 cents; 1892, 4.346 cents; 1893, 4.842 
cents; 1894, 4.12 cents; 1895, 4.152 cents; 1896, 4.532 cents; 1897, 
4.503 cents; 1898, 4.965 cents; 1899, 4.919 cents; 1900,*5.32 cents; 
1901, 5.05 cents; 1902, 4.455 cents; 1903, 4.638 cents; 1904, 4.772 
cents; 1905, 5.256 cents; 1906, 4.515 cents; 1907, 4.649 cents; 1908, 
4.957 cents, 1909, 4.765 cents; 1910, 4,972 cents; 1911, 5.345 cents; 
and 1912, 5.04 cents. 

Table Page 22. 

Here we have another example of the desire to present misleading 
figures. Perhaps no one knows better than Mr. Palmer that the 
average price per ton of beets in 1909 was not $6, as here represented. 
According to the Department of Statistics, the average price was 
$5.35 per ton. This represents an increase between 1899 and 1909 
of 22 per cent, instead of 36 per cent, as here represented. It is 
interesting to note that Mr. Palmer now claims that in 1899 the cost 
of production of beet sugar was 4.25 cents per pound. In contrast 
to this, reference to the record shows that when the beet sugar men 
were trying to interest capital the claim was freely made that beet 
sugar could be produced under 3 cents per pound, some figures being 
as low as 2\ cents per pound. We see here the difference between 
claims made when looking for financial assistance and when looking 
for tariff assistance. We would call your attention to the fact that 
in Germany the average price per long ton paid for sugar beets in 
1900 was $4.76; in 1911-12, it had advanced to $6.07, so it will be 
seen that prices in the United States have not advanced to the same 
extent as in Europe. In addition the German farmer received the 
beet seed free from the factory and had returned to them 40 per cent 
to 60 per cent pulp. In the United States the farmer buys his beet 
seed from the factory and none of the pulp is returned to him for 
feeding purposes, but it is sold as a by-product by the factory at a 
nice profit. 

Now let us see whether the factories in the United States really .did 

fay more in 1909 than in 1899 for what the farmer delivered to them, 
n the first place, our beet sugar factories do not buy beets, in a strict 
sense, as the beet is only a " container." They do buy the sugar in 
the beets. Now the amount of beet sugar extracted per ton of beets 
in this country increased from 199.6 in 1899 to 252.8 pounds in 1909, 
or 26 per cent. So, as a matter of fact, the American farmer was 
delivering the factory 26 per cent more sugar in 1909 than in 1899 
and only receiving an increase in price of 22 per cent, or 4 per cent 
less on the basis of sugar content. 

The Hardwick committee, in a unanimous report, taking good, 
bad, and indifferent factories, showed an average cost to produce 
beet sugar of 3.54 cents per pound. Mr. Palmer now tries to stretch 
this to 3.67 cents per pound. None of these prices represents a 
"proper cost" for producing beet sugar in the United States. Where 



SUGAK AT A SECOND GLANCE. 27 

a factory is properly located, thoroughly equipped, and competently 
run, as was the case with the Spreckles Sugar Co., of California, the 
cost of producing beet granulated is reduced to 2.70 cents per pound, 
as their returns show. It is well known that around 3 cents per 
pound should be the " proper cost" of production in the United 
States, and when the figures are stretched, even to 3^ cents, it moves 
into the "illegitimate industry" class. 

In this connection it strikes us as significant that the domestic beet 
sugar factories who are asking Congress for the privilege of taxing 
American consumers are reluctant to show an honest statement of 
the cost of production. With the exception of the Ameiican Beet 
Sugar Co., no yearl} r statements are issued, and every effort is made to 
conceal profits. Not in the entire record of testimony will be found 
an itemized statement of cost in a well-equipped and properly located 
factory, and nowhere is the admission made that beet sugar is being 
produced at a low cost in this country, although it is well known that 
this is a fact. The idea seems to be that the higher they can make 
their cost appear, the higher Congress must make the tariff bounty. 

Before the Hardwick committee the American Beet Sugar Co., in 
order to make their cost appear high, even went so far as to include 
as a part of their cost of production the freight which they paid on 
sugar from the factory to destination. This freight, of course, was 
charged to the customer, the shipment being "prepaid" instead of 
being sent "collect" for convenience. 

Perhaps the nearest thing we have to an itemized statement of 
cost was that given by Mr. Combs for six factories of the Great 
Western Sugar Co., of Colorado. This showed a stripped cost of 
2.59 cents. Mr. Combs stated that his figures were authentic and 
were obtained from an inside man. They appear reasonable and 
were never contradicted by the factory. He was representing the 
farmers, who complained that the beet sugar factories of Colorado 
were not treating them fairly in the matter of prices paid for sugar 
beets. On his return to Colorado the farmers got the advance asked. 

Mr. Palmer also misrepresents in his attempt to conceal the over- 
capitalization of the beet sugar factories. His data was prepared in 
1912. He goes back to 1909 and "approximates" the capitalization 
at $71,275,000. Reference to the commercial agencies wili show 
that the beet sugar companies were capitalized in 1910 at $130,000,000 
and produced 457,000 long tons of sugar; in 1911, capitalization 
$142,000,000, production 541,000 long tons of sugar. Based on 
their present capitalization, the beet sugar factories sufficient to pro- 
duce all the sugar we consume would be capitalized at $852,000,000. 
How could dividends be earned on this enormous capitalization and 
the price of sugar be reduced at the same time? The cane sugar 
refiners, with a capitalization of $110,000,000 invested in cane refin- 
ing, produced in 1912, 2,922,957 tons. The contract cost of a beet 
sugar factory is $1,000 per ton of daily slicing capacity and in 1889 
the capitalization was on the normal basis $1,097 per ton, but by 
1909 this had been extended to $2,458 per ton, or about 2\ times their 
cost, the increase representing "capitalization of the tariff." 



28 



SUGAK AT A SECOND GLANCE. 



Chakt No. 11. 

(Page 28.) 

Mr. Palmer refers to "four seaboard refineries." The cane sugar 
refiners are: The American Sugar Refining Co., New York, Boston, 
Philadelphia, and New Orleans; Arbuckie Bros., New York; National 
Sugar Refining Co., three refineries in New York (formerly controlled 
by the American Sugar Refining Co., but stock is now being sold by 
the latter because it can not be held under the law); the Federal 
Sugar Refining Co., of New York; the Warner Sugar Refining Co., of 
New York; the W. J. McCahan Sugar Refining Co., of Philadelphia; 
the Pennsylvania Sugar Refining Co., of Philadelphia; the Revere 
Sugar Refining Co., of Boston; the Colonial Sugar Refining Co., of 
Gramercy, La.; the Henderson Sugar Refining Co., of New Orleans; 
the Cunningham Sugar Co., of Sugar Land, Tex.; the Western Sugar 
Refining Co., of San Francisco; and the California & Hawaiian Sugar 
Refining Co., of Crockett, Cal. 

Mr. Palmer's experience must show him that there is ample com- 

fetition in the refining business and that there is no "fixing of prices." 
f not, we refer him to the United States District Attorney. 

In the suit to dissolve the American Sugar Refining Co., the Govern- 
ment states, among other things, that it has an interest in the beet 
sugar factories that produce 64 per cent of the total beet sugar 
production . 

Now beet sugar is produced between August and January 1. Mr. 
Palmer makes the claim that prices are lower while the beet sugar 
factories are in operation. To test the accuracy of this statement 
we will refer to the following table prepared by Messrs Wiilet & Gray, 
showing the average price of refined sugar during the first and last 
six months for six years : 

Quotations for granulated sugar at New York. 





[Cents per pound 


, net cash.] 












1911 


1910 


1909 


1908 


1907 


1906 


Average Jan. 1 to July 1 


4.720 
5.969 


5.015 
4.929 


4.653 

4.874 


5.036 

4.878 


4.646 
4.650 


4.405 




4.619 












5.345 


4.972 


4.765 


4.957 


4.649 


4.515 







This shows that the beet-sugar manufacturer is human enough to 
get as much as possible for his product and that his prices are based 
on world's values. For example, he was very glad in 1911 to sell 
sugar, that cost him around 3 cents a pound to produce, at "basis" 
6? cents which meant over 7 cents per pound in our Western States 
where this sugar was produced. All this because "there was a 
drought in Europe which reduced the European crop nearly 2,000,000 
tons." This shortage advanced world's values so that refiners' first 
cost of raw sugar was increased from June 1 to October 1, 2.10 cents 

Eer pound. The advance was then checked by the new crop European 
eet sugars coming in the market. The cost to the domestic beet 
sugar manufacturers was not increased, but this did not prevent them 
from taking advantage of the higher price, and feeling very well 



SUGAR AT A SECOND GLANCE. 



29 



satisfied that there was a shortage in Germany which enabled them 
to reap this additional profit. 

The testimony before the Hardwick committee has clearly shown 
that the domestic producers' price is based on the in-bond value of 
foreign sugars, plus the duty and cost of refining. In addition to 
these charges the beet sugar factories add the freight from New York 
or San Francisco to distributing market as well. In the sale of the 
domestic producer's product, the cost of production has no relation 
to the selling price. We have a clear example of this in the price of 
sugar in our Western States. Take March 15 as an example, and we 
find the following quotations made by the cane refiners and beet 
factories : 

Prices quoted on beet and cane sugar at various western points on Mar. 15, 1913. 



Guthrie, Okla 

Omaha, Nebr 

Denver, Colo 

Kansas City, Mo 

Salt Lake City, Utah 

Seattle, Wash 

Tacoma, Wash 

Helena, Mont 

Boise City, Idaho — 

Carson City, Nev 

Los Angeles, Cal 

Phoenix, Ariz 

St. Paul, Minn 



Beet. 


Cane. 


Cents. 


Cents. 


4.56 


4.76 


4.48 


4.58 


4.80 


5.00 


4.48 


4.58 


4.95 


5.15 


4.61J 


4.811 


4. 61 J 


4.811 


5.25 


5.45 i 


5.25 


5. 45 


5.25 


5. 45 


4.61J 


4.811 : 


5.59 


5.79 | 


4.47* 


4.57* j 



Chicago, 111 

Milwaukee, Wis. 
Topeka, Kans... 
Atchison, Kans.. 
Kansas City, Mo. 
Louisville, Ky... 
Cleveland, Ohio. 
Bay City, Mich.. 
Saginaw, Mich... 

Detroit, Mich 

Pittsburgh, Pa. . 
Buffalo, N. Y... 
New York, N Y 



Beet. 



Cents. 
4. 38* 
4.38* 
4.56 
4.48 
4.48 
4.38* 
4.371 
4.43* 
4.43i 
4.371 
4.35 
4.35 
4.25 



Cane. 



Cents. 
4.48* 
4.48* 
4.66 
4.58 
4.58 
4.43* 
4.42J 
4.48* 
4.48* 
4.421 
4.40 
4.40 
4.30 



At this point I would call your attention to the manner in which 
the New York price for refined sugar is arrived at. 

Raw sugars coming from Cuba cost refiners, basis 96° test, cost and freight, not Cents. 

less than 2. 22 

Insurance, one-half per cent, or 012 

Duty 1.348 

3.580 

Refiners' first cost, duty paid 3. 58 

Deducting usual discount of 2 per cent from their price of 4.30 cents on refined, 
this leaves a margin to cover the cost of refining, packing, and marketing of the 
difference between 4.22 cents and 3.58 cents, or 64 

That shows you that the domestic producer bases his price on the 
New York price, and the New York price is based on the foreign price, 
plus the duty. 

The trade will not pay the same price for beet as for cane sugar, 
which accounts for the differential. 

Notwithstanding the fact that all the sugar used in our Western 
States is of domestic production, either being Hawaiian cane or 
domestic beet, and pays no duty, the price is always higher than in the 
East, where the sugar imported pays a high duty. As a result of the 
tariff the consumers in these Western States are receiving no benefit 
whatever from the fact that in their immediate locality refined sugar 
is being produced at a cost of around 3 cents a pound. The price 
only recedes as we approach the eastern coast, where the domestic 
producers come into competition with the refiners using imported 
sugar. The lowest price for sugar in the United States is in New 
York. 



30 STJGAK AT A SECOND GLANCE. 

Mr. Palmer reiterates the shopworn argument of the protect! \- 
tariff beneficiaries: "Keep the tariff where it is and let us reduce the 
price of sugar by producing all of our supply at home." The weak- 
ness of this argument has been shown time and again in other arti- 
cles, but' fortunately in the case of sugar we do not have to resort to 
theory, as the above example shows. Colorado produces more sugar 
than the people of Colorado consume, and the cost of beet sugar pro- 
duction in Colorado is as low, if not lower than any other State in the 
Union, yet the consumers of Colorado pay a higher price for their sugar 
than the consumers of almost any other State in the Union. The 
price of sugar in Colorado is arrived at in this way: Take the in-bond 
price of raw sugar, add the duty, add refiners' cost of production, 
add refiners' profit as reflected in the selling price, add the freight 
from seaboard to Colorado points, and you get the price on which the 
domestic producer in Colorado bases his selling quotation to the 
Colorado trade. Similar conditions exist wherever beet sugar is 
produced. 

The beet sugar producers are endeavoring to have Congress retain 
the present rates of duty, which advance the price of sugar to consumers 
all the year around nearly 2 cents per pound, because they make the 
claim that the domestic production lowers the price of sugar a trifle 
for the two or three months that it comes most freely on the market, 
which, of course, makes their position appear ridiculous. 

Mr. Palmer and others who wish the present high rates maintained 
make the charge that "the American refiners of foreign raw sugar 
are expending large sums of money in an effort to obtain free raw 
sugar, which would destroy their only competitor," after which they 
could, at any time, advance their prices beyond world's values, or, 
as Mr. Palmer puts it, "raise the price of sugar at will." This is 
absurd. Does Mr. Palmer believe that it would be easier for our 
refiners to compete with the 16,000,000 tons of sugar produced out- 
side of the United States, which in the case of free sugar would have 
unrestricted entry, than with the 600,000 tons of beet sugar produced 
in the United States, 64 per cent of which, according to the allega- 
tions in the Government's suit, is controlled by the American Sugar 
Kefining Co.? 

The independent sugar refining companies, of whom the Federal 
Sugar Refining Co. has probably been the most aggressive, have for 
years advocated either free sugar or a material reduction in the tariff. 
Not only would they quite naturally like to see their chief competitor, 
the Sugar Trust, deprived of some of the Government "pap" now be- 
ing received through the indirect subsidy paid to their beet sugar 
plants, but they would also like to have a chance at the increased 
business resulting from an increased consumption which would fol- 
low either a material reduction or free trade and which could be 
handled at a reduced expense. In other words, their position in this 
important matter is identical with that of the consumer, who is 
anxious to handle more sugar at a reduced expense. 

In order to prejudice legislators, Mr. Palmer tries to show that it is 
the American Sugar Refining Co., or Sugar Trust, that wants free 
trade in order to crush out the domestic industry. This comes with 
rather bad grace when it is considered that the beet sugar companies, 
in which the American Sugar Refining Co. is interested, are contribut- 
ing to Mr. Palmer's annual salary of $10,000. The American Sugar 



SUGAB AT A SECOND GLANCE. 31 

Kefining Co. is clearly on record in 1909 as desiring that the present 
tariff on sugar be retained, as reference to the Payne-Aldrich Tariff 
Hearings, pages 3430 to 3440, shows a brief filed by this company to 
this effect; but seeing the handwriting on the wall, they now state 
they would be willing to see a nominal reduction, and in this they 
express the sentiment of a considerable portion of the beet sugar 
producers, who, among themselves, for some months have contended 
that the time had come when it was better for them to admit that they 
could stand some reduction than to continue the hopeless task (hope- 
less because of the facts that have been arrayed against them) of try- 
ing to defend the present " pork-barrel" rate. This element, how- 
ever, has been steadily voted down by the followers of those who 
by their system of political jugglery in Washington have been able to 
retain this special-privilege legislation. But Mr. Palmer quotes on 
page 23 some testimony of Mr. Atkins, which would tend to prejudice 
Congress against free sugar. That neither Mr. Atkins nor the com- 
pany he represents is in favor of free sugar is clearly shown by his 
testimony before the Ways and Means Committee, reading as follows : 

Mr. Harrison. I would like to ask the witness a question. Mr. Atkins, you are 
vice president of the American Sugar Refining Co., which is popularly known as the 
Sugar Trust? 

Mr. Atkins. It is sometimes referred to as that. 

Mr. Harrison. Do you appear here representing the sentiment of the directors of 
that company? 

Mr. Atkins. Yes, sir; with their authority. 

Mr. Harrison. Are you in favor of free sugar? 

Mr. Atkins. I am not, and my company is not. 

Mr. Harrison. I wish to ask you further whether you know of the campaign which 
has been conducted by Mr. Frank C. Lowry, as secretary of the Wholesale Grocers' 
Committee in favor of a reduction in the duty on sugar? 

Mr. Atkins. I have occasionally received a pamphlet expressing Mr. Lowry 's views 
on the subject. 

Mr. Harrison. It has been suggested, also, that the campaign conducted by Mr. 
Lowry was at the instigation of the American Sugar Refining Co.; is that true? 

Mr. Atkins. It is untrue. One reason why I appear before this committee is to 
clear that matter up, not^only with your committee, but with the whole country. 
We are opposed to free sugar for the reasons that are given here. We are, however, 
desirous of a reduction in the tariff. 

Mr. Harrison. What is the extent of the interest of the American Sugar Refining 
Co. in the beet-sugar plants of the United States? 

Mr. Atkins. We hold not so much as we had at one time. At present I think 
it is 

Mr. Atkins's Secretary. It is given at page 100 of the hearing before. Would you 
like to have it? 

Mr. Harrison. No; I will not trouble you for that. 

Mr. Atkins. It was $23,000,000, the par value; it is since somewhat reduced. It is 
approximately $22,000,000, the par value, now. We have disposed of some holdings. 

Charts Nos. 12 and 13. 

(Pages 24 and 25.) 

For the first time in his treatise Mr. Palmer recognizes the peculiar 
conditions that existed in 1911, an exceptional year in the sugar 
market. Such a sensational rise in the price of sugar had not been 
seen in 50 years, and is not likely to be seen again. Up until July, 
1911, conditions had been about "normal, but then it became known 
that drought was seriously injuring the growing beet crop in Europe 
and prices began to advance. As a result of this drought the Euro- 
pean crop was reduced from 8,113,000 tons to 1910-11 to 6,340,000 



32 SUGAK AT A SECOND GLANCE. 

tons in the campaign of 1911-12, a shortage of 1,773,000 tons. When 
in the summer it became known that such irreparable injury had 
been done that it would affect the world's supply of sugar, prices 
abroad advanced sharply, the London market on June 1 being 10s. 
5|d., and reached 17s. 9d. on September 28, or 7s. 3fd., nearly 2 
cents per pound. 

The new crop sugars began to be harvested in October, and of 
course everyone in the sugar world recognized that, notwithstanding 
the shortage in supplies, as soon as these new crop sugars began to be 
available prices abroad would recede and that our market would do 
the same; also that, as far as the United States market was con- 
cerned the market would recede further as soon as the new crop 
Cuban sugars became available in January, 1912. Although their 
cost of production had not increased, the domestic beet-sugar inter- 
ests quite naturally took full advantage of the high prices that pre- 
vailed because of the European shortage and were anxious to dispose 
of as much of their sugar as possible before the lower prices which 
were certain to come after the first of the year when Cuban sugars 
would be in full supply, and as consumption in their regular territory 
would only take care of a certain amount of their sugars, they were 
forced to extend their territory in order to more rapidly dispose of 
their product on the high market. They found it better business to 
absorb something in freights in order to reach remote markets and in 
that way dispose of their sugars before the approaching declines be- 
came effective than to carry their sugars in their own markets and 
sell them at lower prices later in the year. 

By February, 1912, refiners' prices had dropped to 5.35 cents as a 
result of their ability to get their raw su^ar supplies from Cuba at l\ 
cents under the high point. From this it will be seen that the beet- 
sugar producers' ideas were quite right and that it was better for 
them to sell in the fall of 1911 at 6.50 cents and absorb freights to 
remote markets than to carry these sugars into 1912 and sell on the 
lower prices quoted above. The same conditions would prevail in 
any year when prices were relatively high in these four months and 
the prospects favored a decline after the first of the year, because of 
the large Cuba crop coming on the market. Such a condition is not 
the result of any virtue on the part of the beet-sugar producers, but 
is simply a situation that would be recognized and taken advantage 
of by any business man. 

Mr. Palmer also quotes certain testimony of independent refiners, 
which shows that they are willing to meet the trust or foreign compe- 
tition on equal terms but that they are not disposed to regard the 
' 'bounty-fed" competition of the trust's beet-sugar plants as fair 
competition. 

Chart No. 14. 

(Page 26.) 

Presents rather a striking illustration of why the tariff on sugar 
should be removed or materially reduced. Mr. Palmer well knows 
that the 600,000 short tons of domestic beet sugar produced in 1911 
did not cost on the average 3-f cents per pound to the manufacturer, 
as he now claims, or even the 3.67 cents that he claimed in table on 
page 22. Nevertheless he adopts this fictitiously high figure and 



SUGAR AT A SECOND GLANCE. 33 

arrives at the conclusion that the cost of producing this crop was 
$45,000,000. The average price of sugar during the last six months 
of 1911, when the major portion of this beet sugar was sold was 5.969 
cents per pound. So that even taking the fanciful basis which Mr. 
Palmer selects for his calculations, it would appear that this beet sugar 
must have realized in the neighborhood of $71,000,000, or 57 per cent 
more than the cost of production. 

But as a matter of fact the average stripped cost of producing this 
600,000 tons of sugar was, no doubt, nearer 3 cents per pound than 
3f cents per pound, as stated by Mr. Palmer. 

Now let us take a look at Mr. Palmer's charts and see how he mis- 
represents the relative returns to the people in the production of beet 
and cane sugar. In the first place he makes the claim that the cost 
of refining, including labor, office help, fuel, bone black, packages, and 
all other supplies is $6.72 per ton, or 30 cents a hundred pounds, and 
represents this to be the cost to our refiners of taking raw sugar and 
placing it on the market in the shape of refined sugar. 

It hardly seems possible that Mr. Palmer does not know that this 
figure is not correct. The barrel alone in which this sugar is packed 
is worth 15 cents per hundred pounds, the brokerage is 3 cents a 
hundred, leaving but 12 cents per hundred pounds from Mr. Palmer's 
figures to cover all other expenses. In contrast to this, we find that 
when figuring the cost of refining beet sugar Mr. Palmer says they 
pay 2.373 cents per pound for their (raw material) beets, yet their 
finished cost is 3.75 cents, and it will be noted that he leaves 1.38 
cents per pound for the operation of refining and putting on the mar- 
ket, whicn after deducting the package and brokerage charges men- 
tioned above, leaves the beet-sugar factory 1.20 cents per pound in 
contrast to the 0.12 cent per pound he leaves for the cane-sugar 
refiner to cover verv much the same operation. 

If Air. Palmer will look at the record he will find that it has been 
testified to over and over again that the cost of refining cane sugar 
and putting it on the market is about five-eighths cent per pound. 
In some factories the cost is without doubt higher than this. But 
accepting this as a basis we find that the 1,801,319 short tons of 
Cuban sugar refined in 1911, which Mr. Palmer is pleased to refer to 
as " imported foreign sugar/' returned to American industries 
$25,219,265, instead of the $12,104,863 as represented by Mr. Palmer. 
But this figure only represents a part of the return to American in- 
dustries from the consumption of cane sugar in the United States in 
1911. We find that Louisiana in that year produced 288,074 tons of 
raw sugar, on which they claim the average return to American in- 
dustries, was 3f cents per pound, or $24,198,216. To this must be 
added the cost of refining, 0.625 cent per pound, or $4,033,036, making 
a total of $28,231,252. Porto Rico produced 280,622 tons of raw 
sugar, on which they claim a cost to produce of 3 cents per pound and 
return to industries of $18,857,798; the cost of refining makes 
$3,928,708, or total of $22,786,506. Hawaii produced 482,231 tons 
at an alleged cost of 2.96 cents per pound, on which the return to in- 
dustries was claimed to be $31,973,844; add the cost of refining and 
we get $6,813,734, or total of $39,083,578. In addition there were 
168,408 tons of Philippine sugars refined at an estimated cost of If 
cents per pound, on which the return to American industries was 

S. Doc. 23, 63-1 3 



34 SUGAR AT A SECOND GLANCE. 

claimed to be $6,601,593; add the cost of refining, $2,357,712, and 
we get a total of $8,959,305. All of this makes a grand total of 
$123,983,906 returned from cane sugar consumed in the United States, 
in contrast to the $12,104,863 represented by Mr. Palmer. 

Thus we have an example of how Mr. Palmer has permitted his 
enthusiasm to disregard facts. 

If the 1,800,000 tons of sugar imported in 1911 from the ''foreign 
country" of Cuba were replaced, as Mr. Palmer suggests, by the 
domestic beet production, Cuba would be deprived of its natural 
market and the United States would be deprived of its natural source 
of supply. The island of Cuba, adjacent to our shores, has been 
favorably equipped by nature for the economical production of sugar, 
and it is proper that the people of the United States should enjoy the 
benefits of this natural advantage. For many years to come they 
can get all the sugar they want from these sources of cane supply, 
Cuba, Porto Rico, Hawaii, and the Philippines, and secure this sugar 
at a low cost if it were not for the high tariff that enhances the price. 
Mr. Palmer urges that instead of taking advantage of this we should 
continue our present high tariff rate and thus enable the beet-sugar 
companies to overcapitalize, until (on the present basis of capitaliza- 
tion) they reach a capitalization of $852,000,000 and we have an 
added production of 1,801,319 tons. Upon this enormous capitali- 
zation the American people will be called upon to pay dividends, and 
the only way this can be accomplished is by a relative increase in 
price to consumers. 

Chart No. 15. 

(Page 27.) 

If the farmer is to reap the indirect benefits claimed by rotating 
sugar beets with other crops once in every 4 years, it is clear that one- 
fourth of the available area — 274,000,000 acres — must be cultivated 
each year to sugar beets. This amounts to 68,500,000 acres. If 
1,670,000 acres will produce all the sugar we require, it is also clear 
that this is such a small percentage of the amount necessary in order 
that the farmer may reap the indirect benefits that the real advantage 
to the farmer will be negligible. 

Mr. Palmer doesn't pretend to explain where the labor supply, 
sufficient to cultivate this land in the proper manner, is to come from, 
or where the enormous capital necessary to the erection of so many 
beet-sugar factories is to be acquired. It has never been a question 
of the amount of land available for growing sugar beets, or lor that 
matter, any other crop. 

Then, too, what is to become of the cane sugar produced in Porto 
Rico, the Philippines/Hawaii, and Cuba. Of course, the beet-sugar 
interests know that the sugar industry 'in Louisiana is an unnatural 
one and can not increase. All available lands in Porto Eico and 
Hawaii are now under cultivation, so there can be no increases from 
this quarter. The beet-sugar men succeeded in having written in our 
tariff law a clause limiting the free entry of Philippine sugars to 
300,000 tons annually, and as Cuba is handicapped by the high tariff 
rate the 7 feel they have the cane situation pretty well tied up, so far 
as the lowering of the price of sugar to consumers from these sources 
of supply is concerned. 



SUGAE AT A SECOND GLANCE. 35 

But, as previously stated, it is not proposed to interfere with the 
legitimate growth of the beet-sugar industry and a reduction to the 
rate which we urge — 60 cents a hundred on 96° centrifugals — will 
certainly not do so, as the farmer who grows sugar beets does not 
receive the benefit of the present high tariff on sugar. 

AMERICAN AND EUROPEAN PRICES FOR BEETS COMPARED. 

It will be seen that sugar beets are cultivated under vastly different 
labor conditions than our other farm products. 

Let us see how the position of our beet-growing farmer, who acts 
to a great extent in the capacity of an overseer, compares with the 
beet grower of Europe ? 

Quite naturally the beet-sugar factories in America desire to pur- 
chase their sugar beets from the farmer at the lowest possible price. 
They began by paying the farmer $4.50 per ton for beets, without 
reference to the sugar contents. Finding the farmers would not 
grow sufficient quantities at this figure, the price has slowly advanced. 

In some Western States a flat price per ton is still paid, but the 
highest basis that is paid anywhere in this country for sugar beets is 
on the following scale: Four dollars and fifty cents per ton for beets 
when the sugar contents is 12 per cent, and 33 J cents per ton advance 
for each 1 per cent increase in sugar content. 

The average sugar content of beets in the United States is between 
15 and 16 per cent, which is nearly the same as in Europe. 

In some of our far Western States the test frequently runs up to 
18 and 19 per cent or more, probably higher than in any other country 
in the world. 

Take as a basis 15 per cent beets, for which test the highest price 
paid in the United States would be (short ton), $5.50. 

Mr. F. O. Licht, who is recognized all over the world as the leading 
statistician of Europe, gives the average price paid the farmer for 
sugar beets in Germany (where the tariff on raw sugar is 47 cents 
per hundred against our rate of $1,685, and on refined sugar 52 cents 
against our rate of $1.90) per long ton, as follows: 

1909-10 $5.30 

1910-11 5.44 

1911-12 6.07 

He also states that " conditions in the other European beet-sugar 
countries do not differ much from those in Germany/' and adds, 
" except that the average beet price per long ton in Russia is about 
$9.42." 

L. Behrens & Sonne, for Belgium and Holland, season 1911, fixed 
the price per long ton at $5.79. 

These prices, however, do not tell the whole story. 

F. O. Licht states: We might add, for your information, that the beet growers of 
Europe receive other returns for their beets besides the cash, viz, they are furnished 
with beet seed free of charge (in the United States the farmer buys his beet seed from 
the factory), they receive allowances for freight, and get from 40 to 60 per cent of 
the pulp returned to them without charge. 

In the United States no beet pulp is returned to the farmer without 
charge, but this by-product of the factory is sold to the farmers and 
nets the factory a very nice return. (Senate hearings, p. 404.) 

A ton of 1 5 per cent beets contains a possible 300 pounds of sugar. 



36 SUGAR AT A SECOND GLANCE. 

We now desire to amplify and reiterate this point by quoting from 
the balance sheet and trade report of the Dirschau (Germany) sugar 
factory for the season 1911-12, as follows: 

We have followed the example of other factories and have increased beet prices 
0.40 mark per 100 kilos for 1912-13, viz : Five dollars and eighty cents per long ton, 
shipment by end of October; $6.04 per long ton, shipment by first half of November; 
$6.28 per long ton, shipment from November 16 to closing down of factory. Rebates 
for freight will be paid as usual. The beet growers will receive additional payments 
if the profits "of the stockholders amount to more than 6 per cent." (Our factories 
that have paid as much as 100 per cent dividends would regard this as "confiscation of 
property.") During the past year, 1911-12, we have made additional payments to 
beet growers, as per contract, at the rate of 89 cents per ton, and we have voluntarily 
paid our regular shippers an additional rate of 79 cents per ton. 

ANALYSIS OF PRICE PAID AMERICAN FARMERS. 

Mr. F. O. Licht also says in regard to the position of the beet grower 
in Europe: 

In answer to your question whether the beet growers are interested in high sugar 
prices, we must say that some of them do profit by them. In Germany beets are 
procured in the following manner: About half of the beets are grown either by the 
factories on fields which they own or lease, or by individual partners, and stockholders 
of the factories. The other half of the beets are grown by independent farmers and 
sold to the factories by contracts which are renewed annually. A fixed price is agreed 
upon for these beets when the contracts are made and the growers of these beets 
naturally neither gain nor lose by any subsequent changes in the price of sugar. On 
the other hand conditions that govern the sale of beets that are grown by the factories 
or their stockholders are entirely different. As a rule a minimum price, which is 
always very low (this accounts for some of the low prices that have been given), is 
fixed and the growers receive further payments out of the factories' profits. At the 
end of each year the net profits are proportioned and distributed among the beet- 
growing stockholders according to the quantity of beets that each one furnished. 

It is evident, therefore, that the growers of about one-half of the beets grown in 
Germany are vitally interested in the movement of sugar prices. 

Our beet-sugar factories delight in dilating upon what wonderful things they do for 
the farmer, and at times boast that they "pay the farmer as much as $6.50 per ton for 
beets." 

Let us analyze this statement and ascertain exactly what it is they 
pay for their raw material, before it enters the factory: 

First, the factories are not buying beets, they are buying sugar. 
When they buy a ton of beets, they are buying the sugar that is con- 
tained in those beets, and they pay on the basis of sugar content. 

When they pay the farmer $4.50 per ton for 12 per cent beets, 
containing 240 pounds sugar, they pay the farmer for the sugar that 
is in the beets at the rate of 1.87 cents per pound; $5.50 per ton for 
15 per cent beets, containing 300 pounds of sugar, they pay the farmer 
for the sugar that is in those beets at the rate of 1 .83 cents per pound ; 
$6.50 per ton for 18 per cent beets, containing 360 pounds of sugar, 
they pay the farmer for the sugar that is in those beets at the rate of 
1.80 cents per pound. 

When they pay $6.50 for 18 per cent beets, they are actually pay- 
ing less for the sugar in the beets (which is what they are buying), 
than if they paid $4.50 for 12 per cent beets, or $5.50 for 15 per cent 
beets. It is clear that the reverse should be true, because of the 
greater value to the factory of the higher test beets. 

If the factories were honest with the farmer and paid for the 18 
per cent beets (which are of greater value because they are easier to 
work) the same basis as on the lower test, they would pay $6.73 per 
ton, instead of $6.50 per ton. 



SUGAE AT A SECOND GLANCE. 37 

In this way the factories take from the farmer, who they "love/' 
a part of the benefit derived from the fact that the beets have been 
properly cultivated, and the Lord has sent His rain and sunshine at 
the proper time and in sufficient quantity to produce the best results. 

FACTORY POSITION TOWARD FARMERS. 

The beet-sugar factories have for many years paid particular atten- 
tion to our tariff laws, maintaining at all times in Washington what 
is credited as being the strongest " lobby" there. The American 
Beet Sugar Association has an office in Washington, and their name 
appears in the telephone directory, although they do no sugar business 
in Washington. What kind of tariff law is it that meets with their 
approval ? 

As a further indication of the beet factories' lack of regard for the 
beet farmer, let us refer to the fact that for years they have been try- 
ing to get the Government to allow sugar beets to come in free of duty. 
They did succeed in the Payne-Aldrich tariff, in having the duty on 
sugar beets (in which the farmer is interested), reduced from 25 per 
cent to 10 per cent ad valorem. The rate on the ordinary garden 
beet remained unchanged, at 25 per cent. 

The rate of sugar beets was reduced, so as to permit the Michigan 
factories to import sugar beets from Canada, in competition with the 
Michigan farmer. 

The Treasury Department's figures show that importations of sugar 
beets from Canada, through Detroit and Port Huron, in 1909, were 
30,731 tons; in 1910, 56,950 tons. These importations paid a tariff 
rate of 45 cents per ton. The sugar content of the beets in 1909 was 
about 16 per cent, 1910, 15? per cent, an average of 15| per cent, which 
means that each ton of beets imported contained 315 pounds of sugar, 
on which the duty was 45 cents, making the tariff rate on sugar in the 
beets at about 14 cents per hundred pounds. 

Sugar-beet seed, which the farmer in this country might grow, but 
which as a matter of fact, is all imported by the factories from Europe, 
duty free; sugar beets, in which the farmer is also interested, pays per 
100 pounds for the sugar in beets a duty equivalent to 0.14 cent; 
sugar in the sack, in which the factory is interested, pays a duty per 
100 pounds on refined sugar, $1.90; and if it is 96° test raw sugar, 
$1,685; and 20 per cent less if imported from Cuba. 

The fact that the factories " protection" is all out of proportion, 
makes it perfectlv clear that the " lobbyists" who have had so much to 
do with our tariff laws, and who have been paid by the sugar factories 
to look out for their interests, have earned their money. Yet they still 
go to our legislators and insist that they "want the present tariff for 
the benefit of the farmer." Such rot! 

It is the beet-sugar factory that gets the benefit from the present 
high tariff rate and not the sugar-beet grower. 

Reduce the tariff to the rates we propose and the farmer will find 
his position unchanged and there is ample testimony to show that he 
is now reasonably well satisfied. 

The beet factory proposed and put through a 10 per cent tariff for 
the farmer who grows sugar beets. We now propose approximately 
a 24 per cent rate for the factory, but the latter cries "ruination." 



38 SUGAR AT A SECOND GLANCE. 

Mr. Palmer refers to the $100,000,000 sent abroad to " foreign 
countries" for the purchase of sugar which we should preferably pro- 
duce at home. Seventy-eight million dollars' worth of sugar is bought 
by the people of the United States in their insular possessions, Porto 
Rico, Hawaii, and the Philippines, and in return the United States 
furnishes these islands with other commodities of about the same 
value. We buy about $76,000,000 worth of sugar annually from Cuba 
and in return our industries sell in Cuba other commodities valued at 
$63,000,000, all of which promotes a larger market for our products. 

The promoters of our domestic beet-sugar factories and land com- 
panies, however, are not interested in reciprocal trade of this kind, 
but desire to check it so that they may reap the benefits of the present 
high tariff to the exclusion of everything else. 

Chart No. 16. 

(Page 28.) 

Are further attempts at misrepresentation. An attempt is made to 
convey the impression that it is the typical American farmer who is 
engaged in the cultivation of sugar beets, but this is not a fact. Let 
us see what the Department of Agriculture has to say about this phase 
of the industry. 

As a rule the farmer, if he grows beets to any extent, does not have on his farm 
sufficient labor to take care of the work of thinning, bunching, hoeing, and harvesting 
the sugar beets. (Report on Progress, 1901, p. 19.) 

Not only does the typical American farm and farm community lack the number of 
laborers required, but the labor itself is of a kind distasteful to our farmers. (Ibid., 
1906, p. 24.) 

The manner in which this need of extra labor has been met is 
instructive, not only as regards the beet-sugar situation itself, but 
also as regards the general trend of industry in the United States 
during the last generation. 

Almost everywhere in the beet-sugar districts we find laborers who 
are employed or contracted for in gangs — an inferior class utilized, 
and perhaps exploited, by a superior class. The agricultural laborers 
in the beet fields are usually a very different set from the farmers. 
On the Pacific coast they are Chinese or Mexicans. Except in south- 
ern California, where the Mexicans are near at hand, most of the work 
is done by Japanese under contract, there being usually a head con- 
tractor — a sort of "sweater" — who undertakes to furnish the men. 
In very recent years Hindus (brought down from British Columbia) 
also have appeared in the beet fields of California. In Colorado 
11 immigrants from Old Mexico compete with New Mexicans (i. e., 
born in New Mexico), Russians, and Japanese. " Indians from the 
reservation have been employed in Colorado, and boys have been 
sent out under supervisors from the juvenile court of Denver. At 
one time convict labor was used in Nebraska. 

In some parts of Colorado, in Montana, and the beet fields of the 
single factory in Kansas, Russian Germans are employed. These 
curious and interesting people are Germans who were imported into 
Russia by the Empress Catherine. They persistently maintained 
their race and language and religion. In recent years they have 
been driven from Russia by persecution. They now center about 
Lincoln, Nebr., and are shipped under contract to the beet fields 



SUGAR AT A SECOND GLANCE. 39 

where they are assiduous and much-prized workers. They are much 
more welcome than the fickle Indians and Mexicans; more welcome 
even than the Japanese, who are quick and capable, but often break 
their contracts. The German-Russians camp in whole families at the 
beet region for the summer; men, women, and children toil in the 
fields. In Michigan the main labor supply comes from the Polish 
and Bohemian population of Cleveland, Buffalo, and Pittsburgh. 
The circulars issued by the Department of Agriculture and by the 
State boards and bureaus, repeatedly call the attention of the" beet 
farmers to the possibility of employing cheap immigrants. The 
troublesome labor problems, it is said, need not cause worry; here is 
a large supply of just the persons wanted. " Living in cities there is a 
class of foreigners — Germans, French, Russians, Hollanders, Austrians, 
Bohemians — who had more or less experience in beet-growing in their 
native countries. * * * Every spring sees large colonies of this 
class of workmen moving out from our cities into the beet fields." 
(Report on Progress, 1904, p. 37. Compare the report of the Kansas 
State Board of Agriculture cited above, p. 19.) 

Thus we see that so far as the cultivation of sugar beets is con- 
cerned, the high-class American laboring man, who must be pro- 
tected, is a myth. 

The expense of this field labor referred to in chart No. 16 must be 
borne by the farmer and is calculated, allowed for, and covered by 
the factory in the price they pay the farmer for his beets. Natu- 
rally, the beet-sugar factories in America desire to pay as low a 
price as possible for their sugar beets. They began by paying the 
farmer $4.50 per ton for his beets, without reference to the sugar 
contents. Finding the farmers would not grow sufficient quantities 
at this figure the price has slowly advanced. The Department of 
Agriculture shows that the average price for sugar beets in the 
United States for 1911-12 was $5.50 per short ton. 

In Germany, where the protective tariff on raw sugar is 47 cents 
a hundred pounds (in contrast to our rate of $1,685 on foreign raw 
sugar and $1,348 on Cuban raw sugar of 96° test) and 52 cents a 
hundred on refined (as compared with our rate of $1.90 per hundred 
pounds), the average price per long ton of beets in 1909-10 was 
$5.30; 1910-11, $5.44; and 1911-12, $6.07. In addition, the farmer 
in the United States is required to buy his beet seed from the factory, 
but in Germany, besides the money for his beets, he receives the 
beet seed free and has 40 to 60 per cent of the beet pulp returned to 
him for feeding purposes; in the United States the pulp is sold by 
the factory at a nice profit. 

In order to divert attention from their disposition to overcapitalize 
and their ability to make excessive profits on watered stock, the 
beet-sugar interests lay much stress on the agricultural phase of 
their industry. The beet-sugar factories themselves recognize that 
the farmer who grows sugar beets does not require a high protective 
tariff, as it has been shown above that they pay the farmer no more, 
and if anything less, than is paid by the factories in Germany, where 
the protective tariff is about the same as we have urged for adoption 
in the United States. 

Ample evidence has been presented by the beet-sugar companies 
to show that the farmer is well satisfied with Ms present condition. 
The Republican Party fully recognized that from an agricultural 



40 SUGAR AT A SECOND GLANCE. 

point of view no protection to the beet-sugar industry was necessary 
and none was given. Sugar-beet seed is admitted free of duty and 
sugar beets (both products of the farm) pay only a nominal rate of 
10 per cent. The Washington representatives of the beet-sugar fac- 
tories arranged for this. While retaining the high rate of duty on 
sugar, the product of the factory, in the Payne-Aldrich bill, they 
arranged to have the tariff on sugar beets, the product of the farm, 
reduced from 25 per cent to 10 per cent ad valorem. The rate on 
ordinary garden beets remained unchanged at 25 per cent. 

Chart No. 17. 

(Page 29.) 

The factory process is entirely a mechanical one as evidenced by 
the claim of beet-sugar companies who boast that "the beet is not 
touched by human hand from the moment it enters the factory until 
it emerges as refined sugar." Moreover, witnesses before the Hard- 
wick committee estimated the labor cost in the beet-sugar factory 
at 14 cents per 100 pounds. The difference in labor cost between 
here and abroad is equalized by other elements of economy in the 
operation of the American factories. The cost of fuel is less, the 
efficiency of the factory is greater, the sugar is refined directly at 
the factory instead of produced as raw sugar at one factory and 
refined in another, and the factories are conducted on a larger scale 
in America than abroad, and thus the cost of operation reduced. 
Hence there is no justification for a high rate of duty on the basis of 
protecting the labor employed in the beet-sugar factory. 

.The tariff rate we propose is equal to $10 to $12 per ton. 

Let us now consider how our domestic beet-sugar industry would 
fare under the rate which we propose. 

It is well known in the trade that where factories are properly 
located and thoroughly equipped there should be no difficulty in 
producing beet sugar at 3 cents per pound (see Hardwick hearings), 
and the beet men themselves boast of this when seeking financial 
assistance. 

Cents per 
pound. 

Taking their own figures, the cost of producing and selling in good, bad, and 
indifferent factories, the Hardwick committee shows that the average cost was 
only 3. 54 

Messrs. Willett & Gray show that the average New York refiner's price for the 

past seven years on refined sugar has been 4. 98 

The Department of Commerce and Labor, Bureau of Statistics, No. 240, 
p. 517, shows that the average cost per pound, free on board in foreign coun- 
tries, of the raw sugar imported, 1905-1911, inclusive, was 2. 378 

Add the freight, to get the average cost laid down at United States ports, say. . . 14 

Making the in-bond price delivered at United States ports 2. 518 

Add the duty which we propose on 96° test, 60 cents on full-duty sugar, and 

48 cents on Cuban importations, making average rate actually paid, say 53 

Making refiners' first cost, duty paid 3. 04 

Add the margin between price paid by refiners for raw sugar and their selling 

price on refined, the past seven years 859 

Making refiners' average selling price, under proposed new rate (New York) . . 3. 907 

The beet-sugar factories are located in the interior and sell their 
sugar above the New York price (see Bulletin No. 12), but, as this 
advantage is partly offset by the fact that the trade will not pay as 



SUGAR AT A SECOND GLANCE. 41 

much for beet sugar as for cane, we have not taken this advantage 
in price into consideration in this calculation. 

We find that the rate we propose would give beet-sugar factories 
who produce at 3J cents per pound a profit, as a direct result of the 
tariff, of 0.407 cent per pound, or $8.14 per ton. 

And those properly located and equipped, and who produce sugar 
at 3 cents, a profit of 0.907 cent per pound, or $18 per ton. 

A cane refinery in New York is very glad to make an average profit 
of one-eighth of a cent to three-sixteenths of a cent per pound. 

As the average price of granulated, under the present tariff, has 
been 4.98 cents per pound, the saving to the American people, under 
the proposed rate, would be over 1 cent per pound, or over $75,000,000 
on the amount of sugar consumed in 1911. 

It is therefore apparent that the rate we propose will amply pro- 
tect, for all legitimate purposes, the sugar industry of Porto Rico, 
Hawaii, Philippines, and also our domestic beets. It will only pre- 
vent the overcapitalization of beet-sugar plants, and the improper 
location of factories, where natural conditions are not such as to pro- 
duce the best results. The industry would be on a much better foot- 
ing if the tariff were revised so as to prevent both of these conditions, 
which are fundamentally so unsound. 

In all our calculations we have provided for the beet grower to 
receive the same price that he now receives for his sugar beets. So 
that while there is ample room for disputing some of the statements 
regarding the farmers " indirect benefits" for the purpose of this 
argument, we can admit all that is claimed by the beet-sugar factories. 

Chart No. 18. 

(Page 30.) 

Mr. Palmer's claim that a material reduction in or the removal of 
the tariff on sugar "would enable the seaboard refiners of imported 
raw sugar so to reduce the price of refined sugar as to destroy the 
domestic sugar-producing industry, after which, with a complete 
monopoly of the sugar business, the refiners could &x. at will the price 
American consumers would be compelled to pay for their product " 
is pure evasion. 

First he claims that the American industry is to be destroyed if the 
tariff is removed, because of importations from foreign countries. 
Thus he recognizes that prices to the consumer will be lowered. We 
do not subscribe to the belief that free sugar would destroy the domes- 
tic beet-sugar industry, because our lands are as fertile, our farmers 
as intelligent, and our factories as efficient as anywhere in the world, 
but for the purpose of this argument accept Mr. Palmer's theory, and 
we find that he now claims that because 541,000 tons of sugar, or 
approximately one-seventh of our consumption, is done away with, 
the world's production of 17,000,000 tons, which will have free access 
to our markets, will combine to put the price up on the American 
consumer. To assume such an attitude is little short of ridiculous. 
We must not lose sight of the fact that according to the Government's 
suit 64 per cent of our beet-sugar production is produced in factories 
in which the Sugar Trust is interested. 

Where does Mr. Palmer get average rate of 1.346 cents per pound ? 
This is even lower than the lowest rate imposed, to wit, the Cuban 



42 SUGAR AT A SECOND GLANCE. 

rate of 1.348 cents per pound on 96°. Notice that he here estimates 
the average American family at 5 persons instead of 5.31 persons in 
accordance with the report of the Bureau of Labor. Nor is it so that 
this tax if removed would fall upon the laboring class of people in 
some other form, as is evident by the disposition of the House shown 
to substitute the income tax for it, and this tax is to be levied upon 
individuals and corporations and copartnerships with incomes of 
more than $5,000 per year, so that the poorer classes would be abso- 
lutely relieved of the burdens of this duty and would reap the full 
benefit of the reduction by reason of the removal of the duty, as was 
the case between 1891 and 1895 when the price of sugar fell by reason 
of the removal of the duty on raw sugar. But if a reduction would 
not affect the ultimate price to the consumer why should the domestic 
interests oppose it ? 

Chart No. 19. 

(Page 31.) 

The average price of sugar in 1900, 5.32 cents per pound, was the 
highest average reached in all the years between 1891 and 1911. 
Mr. Palmer seems to have been careful to select this particular price 
for the purposes of his comparison. A fairer way would have Deen 
to have taken the average price for all the years between 1900 and 
1910, which would be 4.83 cents per pound, and compare such a price 
with the average price of 1900, to wit, 4.972 cents per pound, which 
would show an increase in price over the 10-year average of 3 per cent 
instead of a decrease, as compared with the price in 1900, of .7 per cent, 
as represented here, or a total difference of 10 per cent between Mr. 
Palner's representations and actual conditions. Mr. Palmer was 
careful not to trespass upon 1911, during which time the average 
price was 5.345 cents per pound, or 0.013 cent per pound above 1900 
and 0.515 cent per pound, or 10 J per cent above the average rate of 
4.83 cents per pound between 1900 and 1910. 

According to the Government statistics the price of sugar beets per 
ton in 1900 was $4.50 and in 1910 was $5.35 instead of $6 per ton 
even in 1909, as claimed by Mr. Palmer in table on page 22 of this 
volume. Such a difference in price represents an increase of but 18| 
per cent between 1900 and 1910, instead of 26.8 per cent, as repre- 
sented by him in this chart. 

The reason for the small increase in the price of sugar as compared 
with other commodities is the natural operation of the law of supply 
and demand. Moreover, the sugar industry is so vastly diversified 
and so widely distributed over the world that it would be impossible 
to form an organization that would be able to monopolize the industry 
or control the ultimate price to the consumer. The in-bond price of 
sugar depends upon world-wide conditions. It would require billions 
of capital to bring the industry under one organization as well as 
the cooperation of all Governments engaged in the production of sugar, 
both of which achievements would be impossible. Such a condition 
of affairs does not apply to any other commodity in such general use. 



SUGAE AT A SECOND GLANCE. 43 

Charts Nos. 20, 21, 22, and 23. 

(Page 32.) 

Emphasize the point we have previously made, that the price of 
sugar the world over is to a great extent governed by world's condi- 
tions, and as the supply has kept pace with the demand there has 
not been a general advance in price. This, however, does not seem 
to have any great bearing on our tariff situation, considered either 
from a tariff-for-re venue standpoint or from the Republican doctrine, 
or a tariff to equal the difference in cost of production between here 
and abroad. 

Wholesale prices are given from 1900-1910 in Germany and Great 
Britain, while United States for 1890 to 1911. In the United States 
in 1890 was a tariff of 2.24 cents per pound upon 96° test raw sugar 
and 3| cents per pound upon refined. In 1891 raw sugar admitted 
free of duty and the duty on refined reduced to \ cent per pound. 
Price in 1890 was 6.27 cents per pound and in 1891 was 4.64 cents; 
price in 1910 was 4.972 cents per pound, which shows an increase in 
price between 1891 and 1911 of 0.332 cent per pound, or 7 J per cent 
instead of decrease of 14.7 per cent. Price in 1911 was 5.345 cents, 
or 0.705 cent per pound above 1891, being over 15 per cent increase 
instead of 14.7 per cent decrease in 20 years in the United States. 
As there is no specific reference to the trend of the price of sugar in 
Canada, why was it mentioned at all ? 

In chart No. 19 comparison is given for United States wholesale 
prices for period 1900-1910, showing a decrease in the United States 
of only 7 per cent instead of 14.7 per cent between 1890 and 1910, as 
opposed to a reduction of 15.8 per cent in Germany and 9.6 per cent 
in Great Britain. United States price in 1900, 5.32 cents, next highest 
to 1890 between 1890 and 1911. Price in 1911, 5.345 cents, which 
shows an increase even over high price of 1900 instead of decrease, 
and is the highest point between 1891 and 1912. 

Chart No. 24, 

(Page 33.) 

We are at a loss to appreciate what the cost of distribution of tea, 
coffee, and sugar has to do with the tariff on sugar from either a 
revenue or a tariff equaling the difference in cost between here and 
abroad standpoint, and we can only assume that this chart, like a 
great many others, has been prepared for the purpose of diverting 
attention from the real question at issue. 

It is a recognized fact that sugar has always been regarded by the 
wholesale and retail grocers as a "leader," and on this account has 
been sold at a narrow margin of profit in order to attract other trade. 
Sugar is a heavy staple, and while it is not generally known it is a 
fact that it constitutes about one-third of a grocer's business. That 
is, a grocer who does, say, a $300,000 business a year, $100,000 of it 
is in sugar. It is clear that on such a large volume of business the 
cost of distribution must necessarily be less than on tea or coffee. 

How absurd it is in a tariff discussion to compare the cost of dis- 
tribution of sugar the per capita consumption of which is 81.6 
pounds with tea and coffee, the per capita consumption of which is 
0.96 of a pound and 9.84 pounds, respectively. 



44 sugar at a second glance. 

Charts Nos. 25, 26, 27, 28, and 29. 

(Pages 34 to 38.) 

Why did Mr. Palmer conveniently single out the United States in 
order to make a comparison with Germany of the relative yields per 
acre of wheat, rye, barley, and oats, and the percentage of increase 
over a period of years instead of the United Kingdom? It is well 
known that in the United States, on account of the unlimited area 
available for agriculture and the comparative scarcity of labor, only 
extensive cultivation of the soil is indulged in; while in the United 
Kingdom and Germany, on account of the limited agricultural area 
available and the abundance of labor at hand, the exact opposite, or 
intensified, farming methods are practiced. 

England cultivates no sugar beets, but by the application of intensi- 
fied methods of farming forces her soils to yield 35 bushels of wheat, 
30.8 bushels of rye, 38.9 bushels of barley, and 45.9 bushels of oats 
per acre in contrast to a German yield of wheat 30.5, rye 27.9, barley 
39.5, and oats 59. In accomplishing this England indulges in the 
use of hoed-root crops in rotation, but does not find the sugar beet 
either necessary or indispensable to these results. England for 50 
years and more has far exceeded Germany in yields per acre without 
the assistance of the sugar beet. If the sugar beet is responsible to 
the extent claimed, how does Mr. Palmer account for the superiority 
of the United Kingdom in the yields per acre of wheat and rye over 
Germany, where the sugar beet is said to be used so extensively in 
an intensified way? Would the summary of advantages and per- 
centage of increases in favor of Germany be so marked in chart No. 29 
had Mr. Palmer selected the United Kingdom for the sake of illus- 
tration and comparison instead of the United States ? Is it not rather 
a question of intensified farming than the use of the sugar beet that 
solves the problem of increased yields per acre ? 

Chart No. 30. 

(Page 39.) 

It is the custom of beet-sugar factories when locating in territory 
to make some special arrangements with certain farmers (usually one 
or more in number) who agree to grow a relatively large amount of 
sugar beets, so as to insure the factory obtaining a certain supply. 
These were referred to by the beet growers who appeared before the 
Hardwick committee as "decoy farmers," the explanation being the 
factories would go to the other farmers in the vicinity and say, "Now 
that so-and-so has agreed to grow so many acres at a certain price, 
you should come in on this and grow 5 or 10 acres (as the case may 
be) at the same price." The so-called "decoy farmer" was naturally 
well versed in intensive cultivation and secured the best results from 
his land, and if the crop of the ordinary farmer did not produce such 
satisfactory results he was referred to the returns secured by the 
"decoy farmer" and was told that the fault was with him. 

It is clear that it is from this class of farmer that Mr. Palmer has 
secured the statistics that are presented in chart No. 30, as the yields 
of 26.9 bushels of wheat, 41.6 of corn, and 40.9 of oats, and 38.97 of 
barley are above the United States average, so that the soils them- 



SUGAR AT A SECOND GLANCE. 



45 



selves or the manner in which the crops were cultivated must have 
been exceptional and by no means representative of the average. 

There never has been any question but that intensified farming 
produces more to the acre than the extensive farming generally 
employed in the United States. The difficulty is that we have not 
yet reached a point where intensified farming is entirely practical, 
because we have not the labor supply; gradually this will come, but 
no reasons have been presented to show why beet-sugar production 
by horticultural methods should be forced at the expense of other 
and equally desirable crops. 

There is no desire on the part of anyone to interfere with the 
legitimate growth of the industry. Moreover, were the average yield 
per acre of wheat in the United States 26.9 bushels, in accordance 
with Mr. Palmer's selection, in order to illustrate the effect of beet 
rotation in the United States, our average would be 5 bushels per 
acre above the average of France. Hence there would not be the 
occasion for that dreadful contrast between France and the United 
States in chart No. 37, wherein it is shown that France on 16,253,000 
acres raises 381,227,000 bushels of wheat in contrast to a yield in 
Minnesota, North Dakota, and Kansas of 178,339,000 bushels from 
16,672,000 acres. If Mr. Palmer's selection is representative, then 
these States would raise 448,376,800 bushels of wheat instead of 
178,339,000. 

Chart No. 31. 

(Page 40.) 

Mr. Palmers figures do not seem to agree with the figures he gave 
on page 22, or with those of the Department of Agriculture. It would 
have been much better if in both cases he had adopted the figures of 
the United States Department of Agriculture, Bulletin 260, where we 
find the price paid for sugar beets in the United States from 1901 to 
1912 to be as follows: 



1901-2 $4.50 

1902-3 5.03 

1903-4 4.97 

1904-5 4.95 

1905-6 5.00 

1906-7 5.10 



1907-8 $5.20 

1908-9 5.35 

1909-10 (!) 

19KV11 (») 

1911-12 5.50 



We have previously referred to the fictitious price of $6 per ton for 
1909-10 adopted by Mr. Palmer. It will be noted that the Depart- 
ment of Agriculture's statistics show that the price in 1911-12 had 
only reached $5.50 per ton. 

In speaking of this increase in the price paid for sugar beets Mr. 
Palmer is careful not to mention the increase in the sugar content of 
the beets, which is the basis of its value. It is the sugar in the beet 
that the factories are buying, and not the beets themselves. A com- 
parison of prices and sugar content in 1898 with 1911 will show that 
when the factory now buys a ton of beets it is paying 4 per cent less 
for the sugar that is in those beets than it did in 1898, because the 
sugar content has increased to a greater extent than the price. 



1 No figures given. 



46 SUGAR AT A SECOND GLANCE. 

A comparison of the fluctuating values of potatoes and sugar beets 
made in chart No. 31 has nothing to do with the question of whether 
or not any tariff on sugar should be maintained and is undoubtedly 
introduced with the idea of diverting attention from the real question 
at issue. 

Mr. Palmer shows that there has been no sharp advance in the price 
of sugar beets as has been the case with potatoes in certain years, 
demonstrating the superior ability of the beet-sugar factories to hold 
in check the ever-present demand of the farmer for higher prices for 
is sugar beets. 

Chart No. 32. 

(Page 41.) 

The United Kingdom, where intensified farming is indulged in, but 
no sugar beets grown, yields 38.9 bushels of barley per acre, as com- 
pared with Germany's 39.5. As barley is used extensively in the pro- 
duction of the malt from which is brewed the celebrated German 
beers, more than usual care is exercised in its cultivation. As con- 
trasted with a United States average of 24.3 bushels per acre, other 
countries where the sugar beet is cultivated on relatively as large a 
scale as Germany display the following yields per acre: Hungary, 25.1 ; 
France, 26.2; Austria, 28.2. 

The yield of wheat in England, where no sugar beets are grown, is 
35 bushels per acre, in contrast to a German yield of 30.5. Yield in 
the United States, 15.8, in contrast to 14.1 in Hungary, 19.9 in 
Austria, and 21.9 in France. What comfort does Mr. Palmer derive 
from these figures and comparisons ? If the sugar beet is responsible 
for the results, why do not France, Austria, and Hungary show rel- 
atively as large yields as Germany, and why should England, where 
no sugar beets are grown, produce 5 bushels to the acre more of 
wheat and about the same number of bushels of barley to the acre 
as Germany ? Why should not the German average equal the Belgian 
if the sugar beet alone is responsible ? As a matter of fact, Belgium 
has to resort to intensified methods of farming over her limited, 
crowded agricultural area in order to provide for her population, 
which averages 300 persons per square mile. She has the labor, the 
lack of which is the main drawback in the United States to intensified 
methods of farming. 

Chart No. 33. 

(Page 42.) 

The German average of 59 bushels of oats to the acre is taken for 
the year 1909, the highest ever attained in Germany, to be compared 
with an average in the United Kingdom for that year of 45.9 bushels 
per acre. Now, the average in Germany between 1902 and 1911 was 
51.5 bushels; of England, 44.7 bushels. The German yield of rye 
was 27.9 bushels and United Kingdom 30.8. Since Hungary, France, 
and Austria are considerably below the average yield in Germany in 
both instances, does not the comparison between the United Kingdom 
and Germany tend to prove that something more than the cultivation 
or rotation of the sugar-beet crop in connection with these cereals is 
responsible for the yield and that it is rather a question of intensified 



SUGAR AT A SECOND GLANCE. 47 

methods of farming than the presence of sugar beets ? In this and 
the preceding chart Belgium without particular regard to the use of 
the sugar beet shows what can be accomplished by intensified methods 
of farming. Her yields far exceed Germany or even England. This 
is due to the fact that she is populated to the extent of 300 people per 
sqtfare mile and hence is compelled to force the maximum yields by 
intensified methods of farming over her limited area in order to sup- 
port and feed her population. 

Chart No. 34. 

(Page 43.) 

Why not take the United Kingdom, where the same methods of 
agriculture are practiced, for the sake of comparison with Germany, 
instead of the United States, where these methods are impossible, and 
then make a comparison of the results ? It is not very likely upon a 
relative basis of comparison the discrepancy would have seemed so 
pronounced in favor of beet culture. 

It is here stated, "Wherever possible the farmers of Germany grow 
sugar beets in rotation with cereal crops." Yet these comparisons 
assume that the whole acreage of Germany planted to cereals and 
potatoes has been rotated (one year in four) in connection with the 
cultivation of sugar beets, instead of "wherever possible." 

If 42,776,000 acres rotated in sugar beets one year in four, then at 
least one-fourth of this area, or 10,694,000 acres, are yearly cultivated 
to sugar beets. But as a matter of fact less than 1,250,000 acres are 
devoted to the cultivation of sugar beets in Germany; so it is apparent 
that Mr. Palmer's claim, that the high yield of other crops in Germany 
is due solely to rotation with sugar beets one year in four, is entirely 
without foundation in fact. 

Mr. Palmer calls attention to the fact that the combined acreage of 
wheat, rye, barley, oats, and potatoes in the United states in 1907 
was 88,546,000 acres, and states that one-fourth of this land should 
be devoted to sugar beets each year in order to "double the yield of 
cereal crops in the United States, double the stock-carrying capacity 
of farms, and check the rise in prices." One-quarter of this area in 
the United States would be 22,136,500 acres, which, based on our 
present production, would produce 26,563,800 tons, as compared with 
the world's present production of beet and cane sugar of 15,863,589 
tons. 

To cultivate sugar beets requires a great deal of hand labor, and 
there is not sufficient labor in the United States for our present 
requirements. Aside from other considerations, where does Mr. 
Palmer expect to get the necessary labor to put his theories into 
practice, and where will he find a market for this immense amount 
of sugar ? 

These points, however, are of minor importance. Mr. Palmer's 
main object is to impress Congress with the advisability of main- 
taining the present "pork-barrel" rates on sugar, so that the pro- 
moters of the beet-sugar factories and land companies may continue 
to reap excessive profits at the expense of the American consumer. 



48 SUGAR AT A SECOND GLANCE, 

Chart No. 35. 

(Page 44.) 

Again we suggest a comparison between the crop averages of the 
United Kingdom, where no sugar beets are raised, and Germany, where 
sugar beets are extensively and intensively cultivated, in order to 
arrive at a fairer comparison than with the United States. Such a 
comparison will explode the theory here advanced that sugar beets 
are necessary in order that increased yields of other crops may be 
secured. On account of the limited area for cultivation in proportion 
to population as compared with the United States, the United King- 
dom, like Germany, indulges in intensified methods of farming that 
are not resorted to in the United States. 

Charts Nos. 36, 37, and 38. 

(Page 45.) 

As there is no beet-sugar factory in North Dakota and but one in 
both Minnesota and Kansas, how many factories would it require to 
produce result claimed ? It now requires 76 factories to take care of 
the production from 474,000 acres. If rational beet-sugar rotation 
in connection with sugar beets means planting to sugar beets one 
year in four, one-fourth of the area of Minnesota (5,200,000 acres), 
or 1,300,000 acres would have to be cultivated to sugar beets annually. 
This would be 2.74 times the present area now cultivated to sugar 
beets in the whole United States, and would require 200 beet-sugar 
factories in Minnesota alone. Upon the same basis for Minnesota, 
North Dakota, and Kansas, one-fourth of 16,672,000 acres, or 
4,143,000 acres annually, would have to be cultivated to sugar beets, 
which would require 639 beet-sugar factories in these States alone in 
contrast to only two that now exist. Could these States, or the United 
States, support this number of factories? According to the repre- 
sentations made by Mr. Palmer this must be accomplished before the 
" indirect benefits" accrue to the farmer. 

Chart No. 39. 

(Page 46.) 

The total area now cultivated to sugar beets in the United States 
is 474,000 acres. In order to equal or exceed the crop yields of Ger- 
many, which Mr. Palmer claims are due to the rotation with sugar 
beets one year in four, he advocates cultivating to sugar beets upon 
the same theory of rotation the 85,546,000 acres now planted to 
cereals and potatoes in the United States. This would mean that 
every year one-fourth of this area should be cultivated to sugar beets, 
or 21,386,500 acres. The 474,000 acres no wcultivated to sugar 
beets produce over 600,000 tons of beet sugar. Were the cultivation 
increased to 21,386,500 acres upon the same basis of increase in pro- 
duction it would amount to 27,000,000 tons of beet sugar per annum, 
or over 45 times as much. To take care of this increase in production 
45 times the number of the present factories (76) would nave to be 
erected, or 3,420 factories, and upon the present basis the capitaliza- 
tion of the beet-sugar companies necessary to erect these factories 
and take care of the increase in production of sugar beets would be 
$6,390,000,000, or 45 times $142,000,000. In his " vision" Mr. Palmer 



SUGAK AT A SECOND GLANCE. 49 

is not troubled by the practical question of how the above-mentioned 
details would be taken care of, or how this increased production, 
amounting to 27,000,000 tons, or one and three-fourth times the present 
world's production of both cane and beet sugar, would be marketed. 
Certainly under these conditions beets would be worth so little that 
we presume the farmer would have to rely entirely on " indirect bene- 
fits " for his gain(?) . Of course, there would be no trouble in disposing 
of this increase in production and the farmer would receive the same 
price for his beets that he does now! Neither would the farmer have 
the least difficulty in procuring the necessary help or be under any 
additional expense! All he would have to do would be to sit back 
and collect $1,376,915,000 more a year than now, according to this 
" dream. 7 ' 

Now, if Mr. Palmer's theory is correct that Germany owes her 
increase in crop yields to the extensive cultivation of the sugar beet 
in rotation every fourth year with other cereals, it must be true that 
her 42,776,000 acres scattered over the whole Empire have, at some 
time or another, been grown to sugar beets, and that factories have 
been erected in the vicinity of all these lands in order to take care of 
the product. In order to carry out the rotation theory one year in 
four, at least one-fourth of this area would have to be grown in sugar 
beets each year or lose the benefits of the rotation process. Upon the 
basis of production in the United States this would mean 12,825,000 
tons of beet sugar in Germany per year as against their present 
maximum production of 2,800,000 tons. It would be impossible to 
account for beet-sugar cultivation or rotation one year in four as 
responsible for the increased yield of crops without the above results. 
This not being the actual case in Germany, is it not more sensible and 
logical to ascribe these increased yields rather to intensified methods 
of farming and cultivation in general than solely to beet-sugar culti- 
vation, which only extended over 1,247,000 acres in 1912, and not the 
necessary 10,694,000 acres of Germany so as to be rotated one year 
in four in connection with other crops ? According to the testimony 
of Fred. R. Hathaway at the hearings on the sugar schedule before the 
last Senate Finance Committee, the actual ares planted to sugar beets 
in Germany averaged 1,107,000 acres for the years 1909, 1910, and 
1911. According to the statistics of the German Empire it was 
1,247,213 acres for the year 1912. 

Chart No. 40. 

(Page 47.) 

The possibilities of accomplishment seem too remote and the 
benefits too " indirect" for even our imagination to follow along the 
lines of the workings of Mr. Palmer's mind in this chart. 

Chart No. 41. 

(Page 48.) 

Mr. Palmer would like to have us infer from the fact that we 
exported less foodstuffs, beef, and pork in 1910 than we did in 1900 
that therefore the production of foodstuffs and the supply of cattle 

S. Doc. 23, 63-1 4 



50 SUGAR AT A SECOND GLANCE. 

and swine had decreased. This falling off is mainly due to increase 
in home consumption, due to the natural law of supply and demand. 
We have increased in population 15,000,000 in these 10 years. Also 
there has been a large increase in the domestic price in comparison 
with the exports that keeps these commodities at home. Besides, in 
consequence of the high prices at home the farmers have shown a 
tendency to increase the stock-carrying capacity of their farms, as will 
be demonstrated by the following comparisons between the two years. 
In 1900 there were in the farmers' hands 44,002,000 cattle, valued at 
$1,204,298,000, and 37,079,000 swine, valued at $185,472,000. In 
1910 there were 69,080,000 cattle, valued at $1,697,771,000, and 
47,782,000 swine, valued at $436,603,000. The average price per 
head of cattle in 1900 was $28.28, and in 1910, $27.60; for swine, $5 in 
1900 and $9.14 in 1910. So there was an increase in the stock-carry- 
ing capacity of farms in the United States in 1910 over 1900 in the 
number of cattle of 25,078,000, valued at $493,473,000, and an increase 
in the number of swine of 10,703,000, valued at $251,131,000. Our 
yield of wheat in 1900 was 522,230,000 bushels, valued at $323,515,000, 
and in 1910, 635,121,000 bushels, valued at $561,051,000, an increase 
in production of 112,891,000 bushels, and an increase in value of 
$237,546,000, though there was a falling off in exports of 30.5 per cent, 
due more than likely to a difference in the farm value of 61.9 cents 
per bushel in 1900 as against 88.3 cents in 1910. Our yield of corn in 
1900 was 2,105,300,000 bushels, valued at $751,220,000, and in 1910 
was 2,886,260,000, valued at $1,348,817,000, or an increase in pro- 
duction in 1910 over 1900 of 780,960,000 bushels, valued at $633,- 
597,000, and a falling off in exports of 4.3 percent, due perhaps to a dif- 
ference in price of 35.7 cents in 1900 as against 48 cents in 1910. The 
secret is that the United States no longer has a surplus for export, due 
to the increased domestic demand and the attractive domestic price as 
compared with export. The mere fact that there is a falling off in 
exports proves nothing. As a matter of fact there has been an increase 
in everything, including the stock-carrying capacity of farms, yet 
there has been no decrease in prices but a steady increase. Moreover, 
there has been an increase m the production of beet sugar in the 
United States between 1898 and 1913 of 600,000 tons, and during that 
same period of growth and extension of the beet-sugar industry there 
has been an increase in the price of wheat of 30 cents per bushel, an 
increase in the price of cattle of $2.50 per head and $4 pernead in swine. 
If the cultivation of the sugar beet is to contribute to the solution of 
the high cost of living by reducing prices by increasing crops and stock 
carrying capacity of farms, it seems to have failed so far in the 
United States. 

Page 50. 

the blighting effect of cuban reciprocity on the develop- 
ment of the american beet-sugar industry. 

We submit herewith a complete list of the beet-sugar factories in 
the United States, together with their daily slicing capacity and the 
capitalization of the various companies who operate them. 



SUGAE AT A SECOND GLANCE. 



51 



Name of company. 



Alameda Sugar Co . 
Anaheim Sugar Co . 



American Beet Sugar Co . 



Amalgamated Sugar Co . 

Billings Sugar Co 

Continental Sugar Co. . . 
Corcoran Sugar Co 



Great Western Sugar Co. 



German-American Sugar Co. 
Holland-St. Louis Sugar Co . 



Holly Sugar Co. 



Iowa Sugar Co 

Lewiston Sugar Co . 
Los Alamitos 



Michigan Sugar Co . 



Menominee River Sugar Co . 

Minnesota Sugar Co 

Mount Clemens Sugar Co . . . 

Chippewa Sugar Co 

Nevada Sugar Co 

Owosso Sugar Co 



Pope, Charles 

Rock Country Sugar Co 

Sacramento Valley Sugar Co 

Santa Ana Cooperative 

San Joachim Valley Sugar Co 

Scottsbluff Sugar Co 

National Sugar Manufacturing Co. 

San Luis Valley Sugar Co 

Southern California Sugar Co 

Spreckels Sugar Co 

Toledo Sugar Co 

Union Sugar Co 

United Sugar & Land Co 



Utah-Idaho Sugar Co. 



Southwestern Sugar & Land Co . 

United States Sugar Co 

Washington State Sugar Co 

West Bay City Sugar Co 

West Michigan Sugar Co 

Western Sugar & Land Co 

Wisconsin Sugar Co 

Western Sugar Refining Co 



Location of plants. 



Capitalization 
] (including 
bonded debt). 



Alvarado, Cal , 

Anaheim, Cal , 

Oxnard, Cal , 

Chino,Ca] , 

y.iimrtr, Colo 

T /as Animas, Colo 

R-oeky Ford, Colo 

Grand Island, Nebr 

Ogden, Utah 

Logan, Utah 

BiT-ley, Idaho 

Billings, Mont 

{Fremont, Ohio 
Findlav, Ohio 
Blissfield, Mich/. 

Corcoran, Cal 

Loveland, Colo 

Greeley, Colo 

Eaton, Colo 

Fort Collins, Colo 

L ongmont, Colo 

Windsor, Colo 

Sterling, Colo 

Brush, Colo 

Fort Morgan, Colo 

I Paulding, Ohio 

\Bay City, Mich 

[Holland, Mich.. 

<St. Louis, Mich 

[Decatur, Ind 

(Swink, Colo 

{Holly, Colo 

iHuntington Beach, Cal . 

Waverly , Iowa 

Lewiston, Utah 

Los Alamitos, Cal 

Bay City, Mich.. v 

Caro, Mich.; 

Alma, Mich 

Sebewaing, Mich 

Carrollton, Mich 

Crosswell, Mioh 

Menominee, Mich 

Chaska, Minn 

Mount Clemens, Mich. . 

Chippewa Falls, Wis. . . 

Fallon, Nev 

/Owosso, Mich : 

\Lansing, Mich 

Riverdale, 111 

Janesville, Wis 

Hamilton City, Cal 

Dver.Cal 

Visalia, Cal 

Scottsbluff, Nebr 

Sugar City, Colo 

Monte Vista. Colo 

Pant a Ana, Cal 

Spreckels, Cal 

Rossford , Ohio 

Betteravia, Cal 

Garden City, Kans 

Lehigh, Utah 

Garland, Utah 

Austin. Utah 

Idaho Falls, Idaho 

Sugar, Idaho 

Blackfoot, Idaho 

Nampa, Idaho 

Glendale, Ariz 

Madison, Wis 

W averlv, Wash 

West Bay Citv, Mich . . 

Charlevoix, Mich 

Grand Junction, Colo. . 

Menominee Falls, Wis. 

Marine City, Mich 



Total. 



$1,500,000 
850,000 



20, 000, 000 

-4,000,000 
1,250,000 

-2,400.000 
1,200,000 

30,000,000 

2,000,000 
3, 300, 000 

5,500,000 

550,000 
1,200,000 
1,000,000 

12, 500, 000 



825.000 

1,200,000 

600.000 

700.000 

1,000.000 

2,300,000 

500,000 
800.000 
2,210,000 
1,000,000 
1,225,000 
1,200,000 
1,500,000 
1,500,000 
1,000,000 
5,000,000 
1,000.000 
3,000,000 
8,000,000 



11,000,000 



3.400.000 
550,000 
500.000 
200,000 
350.000 
2,000.000 
1.500 000 
100,000 



Daily 

slicing 

capacity. 



141.410.000 



Tons. 
750 
750 

2,000 
700 
400 
800 

1,000 
400 
500 
500 
500 

1,650 
500 
600 
700 
600 

1,800 
900 

1,000 

1,800 

1.800 
900 
800 
900 
700 
900 

1,400 
500 
600 

1,000 

1,200 
600 
600 
500 
650 
900 

1,300 

1.200 
850 
600 
900 
600' 

1,000 
600 
600 
600 
600 

1,000 
600 
600 
600 
700 
600 
350 

1,200 
500 
600 
750 

3,000 

1,200 
800 
900 

1,200 
750 
500 
750 
800 
650 
600 
600 
600 
500 
900 
600 
500 
600 
550 



63, 550 



52 SUGAR AT A SECOND GLANCE. 

From this list it will be seen that the total number of beet-sugar 
factories is 76, of which 17 are located in Colorado, 16 in Michigan, 
13 in California, 6 in Utah, 5 in both Idaho and Ohio, 4 in Wisconsin, 
2 in Nebraska, and 1 each in Montana, Minnesota, Kansas, Iowa, 
Illinois, Indiana, Arizona, and Nevada. Were this number aug- 
mented to the extent of the plants said to be abandoned in the list 
submitted on this page then there would be located altogether in the 
above States the following number of factories: Michigan, 40; 
Colorado, 22; California, 18; Wisconsin, 17; Utah, 9; Ohio and 
Iowa, 7 each; Idaho and Minnesota 6 each; Arizona, Nebraska, 
North Dakota, Montana, New York, South Dakota, Indiana, and 
Wyoming, 2 each; and 1 in each of the States of New Jersey, Oregon, 
Nevada, and Pennsylvania, making 152 beet-sugar factories in all. 
If all of these projected factories had been realized, $58,000,000 
would be added to our present beet-sugar capitalization of 
$142,000,000, making a total beet-sugar capitalization of $200,000,000. 
However, did they capitalize on the basis of the beet-sugar companies 
now in existence- — to wit, $2,458 per ton of daily slicing capacity — 
instead of on the normal basis of $1,000 per ton the total capitaliza- 
tion of the new factories would be $120,422,000, which would make 
a total beet-sugar capitalization of $262,442,000. Except for these 
152 factories we have no data for the balance of the 355 factories, said 
to be projected and abandoned between 1898 and 1911. Suffice to 
observe that if they were realized and put in operation Michigan, 
Colorado, California, Utah, and Idaho, where the desirable, profitable, 
and easily irrigated beet-sugar lands are located, would be called upon 
to bear the brunt of the increase, and the beet-sugar companies 
located in these various States in which the trust is so heavily inter- 
ested would be called upon to meet the demoralizing competition of 
such an increase. Instead of an annual beet-sugar production of 
700,000 tons there would be an increase to 3,500,000 tons, which 
would be about sufficient to supply the whole of the United States 
without taking into consideration the 1,200,000 tons of cane sugar 
now supplied by Louisiana, Hawaii, Porto Rico, and the Philippines. 
Upon the present basis of capitalization the 419 projects spoken of 
by Mr. Palmer would be capitalized at $781,000,000. Even in the 
absence of " tariff agitation and enactments," some difficulty would 
be experienced in attempting to make profits sufficient to pay divi- 
dends upon such an amount. We desire to observe that instead of 
419 factories that Mr. Palmer speaks of as projected between 1898 
and 1911, according to his representations in chart No. 42, under the 
heading of u New factory projects," the total number appears to be 
728 instead of 419. Surmounting all difficulties, and for the sake of 
argument admitting the possibility of this accomplishment, we find 
that the farmer's hope of " indirect benefits" so graphically depicted 
by Mr. Palmer have no chance of realization, as these projects would 
utterly fail to take care of rotation of available lands to sugar beets 
one year in four in these respective States. 

But aside from " tariff agitation and enactments " and the so-called 
"blight of Cuban reciprocity," let us see whether or not the realization 
of these factories has not been circumvented by other and more 
probable means. 



SUGAR AT A SECOND GLANCE. 53 

In the suit now pending by the Government to dissolve the 
American Sugar Refining Co., as a trust and monopoly in restraint 
of trade, Mr. Chester S. Morey, president of the Great Western 
Sugar Co., of Colorado, gave the following testimony, regarding the 
erection of more sugar-beet factories in Colorado, in answer to this 
question by Mr. Knapp: 

Mr. Knapp. What I am asking you is whether prior to the commencement of this 
suit and the present tariff agitation you had not already taken the position that you 
are opposed generally to the investment of any more money in beet sugar in Colorado? 

Mr. Morey. I think I have taken the position that we have all the factories in 
Colorado we ought to have — all that the country would support. (Vol. 2, p. 874, of 
testimony in United States v. The American Sugar Refining Co. et al.) 

(As the acreage of Colorado is not now grown to sugar beets one 
year in four, it appears that the farmers can never realize the indirect 
benefits so alluringly pictured by Mr. Palmer.) 

In order to show the disposition of the American Sugar Refining 
Co., or Trust, toward the erection of independent beet-sugar factories 
in their exclusive territory and to illustrate how its attitude has been 
responsible for the abandonment of a great many projects, we submit 
the following letters from the records of the testimony in the above 
case. 

The Great Western Sugar Co., 

Denver, Colo., June 8, 1906. 
Mr. H. 0. Havemeyer, 

New York. 
Dear Sir: The inclosed letter from Mr. Boettcher explains itself. Would like to 
know if you see any way to check this kind of competition . I sometimes think it is a 
mistake not listing our stock and offering it for sale; if people want to buy common 
stock we ought to give them a chance to come in. This is simply a suggestion. We 
are doing everything we can to discourage the building of any more factories until the 
matter of tariff legislation is more settled than it is at present. We are using that as a 
basis of argument against the building of any more factories. 

Promoters like the Garden City and the Sheridan people are claiming that trusts 
have made great profits out of the business and in that way selling their stock. 
Respectfully, yours, 

C. S. Morey. 

The letter of Mr. Boettcher referred to above: 

The Great Western Sugar Co., 

Denver, Colo., June 27, 1906. 

My Dear Mr. Morey: I had an interview to-day with the Colorado Springs people 
in reference to their contemplated factory to be built at Sheridan, Wyo. 

Sheridan is situated on the Burlington route, a distance of 140 miles from Billings. 
If this factory is built, of course, they will come in direct competition with our local 
points of the Billings factory. I was in hopes that I would be able to have these 
Colorado Springs people take an interest in our Billings factory and keep them from 
building this contemplated plant, but I fear I will not be able to do anything with 
them, as they tell me they have sold their common stock of the Garden City plant, 
which they are now building, at $50 per share and upward. They frankly admit that 
this common stock is all water and does not represent anything, that is the way they 
are making their money. They feel they can do the same thing in Sheridan and claim 
they have a ready sale for their common stock. Most of their stock is sold. They also 
expect to make a large profit on land they have purchased, and expect to build a 
number of ditches and sell out the land at a large profit. 

There is nothing I can say to them that would be attractive enough for them to dis- 
continue their building the Sheridan factory, and I fear they will build a plant to be 
ready for the crop of 1907. The promoters of the scheme put in very little money of 
their own, as they seem to have the faculty of having their people put up the money, 
and they are getting the benefit of the common stock for themselves. 



54 SUGAR AT A SECOND GLANCE. 

I understand Mr. McKinnie is going to Sheridan latter part of next week, and as I 
expect to go to Billings about the 5th of next month will stop off at Sheridan and look 
over the territory, and if there is anything more I can do with these people to keep 
them from building a factory I will do so, although I have very little hopes. 

I am just calling your attention to these items so you will know they raise the 
money for their new factories. 

Very truly, yours, C. Boettcher. 

Mr. C. S. Morey, Denver, Colo. 

The Mr. McKinnie referred to in the above letter is J. R. McKinnie, 
of Colorado Springs, Colo., who promoted the United States Sugar & 
Land Co., with a beet-sugar factory at Garden City, Kans., with a 
daily slicing capacity of 900 tons. The company itself is capitalized 
for $8,000,000, though this factory represents an investment of but 
$900,000, which indicates that its main purpose is to promote and 
speculate in the sale of so-called beet-sugar lands. Mr. McKinnie 
was the original promoter and first president of this company, and 
had associated with him a number of capitalists from Colorado 
Springs, Colo., in whose control this company now is, though Mr. 
McKinnie is not active in this particular one, as he has organized two 
other beet-sugar land companies and is president of the Western 
Sugar & Land Co., with a capital of $2,000,000, and a beet-sugar 
factory at Grand Junction, Colo., of 500 tons daily slicing capacity, 
and vice president of the Southwestern Sugar & Land Co., with a 
capital of $3,000,000, a bonded indebtedness of $400,000, and a beet- 
sugar factory at Glendale, Ariz., with a daily slicing capacity of 600 
tons. Mr. McKinnie has been the moving spirit and promoter of all 
of these beet sugar and land companies, and has at one time or 
another been president of all of them, and has had associated with 
him in these enterprises practically the same group of capitalists from 
Colorado Springs, including such names as C. M. MacNeil, president 
of the United Sugar & Land Co. ; R. P. Davie, president of the South- 
western and vice president of the Western Sugar & Land Co.; C. C. 
Hamlin, vice president of the United States Sugar & Land Co.; and 
H. D. Haskins, second vice president; Kieth Steward, third vice 
president; F. A. Gillespie, secretary and treasurer; and Spencer 
Penrose, secretary of the United States Sugar & Land Co. ; Chester M. 
Curtis, secretary of the Southwestern; and a Mr. Sharer, secretary 
and treasurer of the Western Sugar & Land Co. Mr. C. Boettcher, 
who is responsible for this letter and expressed the opinion about the 
value of common stock and the speculative nature of the enterprises 
in which Mr. McKinnie was interested, is now vice president of the 
Great Western Sugar Co., of Colorado. 

We submit here another letter, which explains itself: 

February 27, 1905. 
Mr. T. R. Cutler, 

Salt Lake City, Utah. 

Dear Sir: Referring to yours of February 21, bearing upon Boutelle and his 
projects, I wired you to buy a tract of land in any town where Boutelle or his crowd 
buys one with a view and determination of building a competing factory. Boutelle 
is a very unreliable man; he represents a very unreliable crowd, and he is in it for 
the commission which the promotion gives him. He can be very easily knocked out. 

If any territory about us is suitable and ready for a factory, we should be on the alert 
and provide it, and if you find any company having bought a tract of land in view of 
building a factory, do not hesitate to buy a tract in the same place and let the people 
understand that we are in earnest. 



SUGAK AT A SECOND GLANCE. 55 

You should have an active man following him and his crowd up. Outside of the 
promotion feature they have no interest whatever, and so many of their enterprises 
nave proved unsuccessful that it would be an advantage to the community to knock 
them out. 

Yours, truly, H. 0. Havemeyer. 

What chance of success would an independent factory have in 
attempting to prevail against such methods of retaliation for tres- 
passing upon trust territory in Utah ? 

Extract from letter of C. Boettcher to C. S. Morey: 

The Billings Sugar Co., 
Denver, Colo., Aug. 27, 1906. 
Mr. C. S. Morey, 

Harbor Springs, Mich. 

Dear Sir: * * * I tried to arrange with Mr. Cutler to have him agree to stay 
out of Montana points and we will stay out of Idaho, but he seems to think there are 
so few places in Idaho that we can reach that he would not agree to that, but they have 
agreed to stay out of places where our rate is less than theirs. I have also called on 
Mr. Eccles, in reference to his building a factory in Bozeman. Mr. Eccles, however, 
did not return to meet my appointment, but I met Mr. Rolapp and we talked the 
matter over and they seem to calculate to build a factory at Bozeman. I explained 
our side of the case very fully, stating that everything was very high in Montana, that 
labor was exceptionally high, and if we had to make sugar at the Montana points to be 
shipped to Missouri River it certainly would be a losing scheme, as it would coat con- 
siderably more to make sugar in Montana than it would in Utah or Colorado, and our 
factory was large enough to supply all the local territory. He seemed to realize that 
fact and made a statement that they had not looked at it in that light and it was a new 
point to be brought up, and agreed that as soon as Mr. Eccles returned he would take 
it up with him and would probably see us before they would do any work. 

Now, it seems to me foolish for our people in New York to agree to take a half interest 
with Mr. Eccles and come into direct competition with the Billings factory. Our 
people in New York should take the stand, and stay with it, not to put a dollar into 
these factories and I feel satisfied that Mr. Eccles will not build this factory if our New 
York people take that stand. * * * 

Very truly, yours, C. Boettcher, President. 

David Eccles was the organizer and president of the Amalgamated 
and Lewiston Sugar Companies of Utah, in which the trust owned 
a half interest. He was induced to abandon the Bozeman factory. 

Extract of letter of Thomas It. Cutler to H. O. Havemeyer. 

Salt Lake City, April 11, 1905. 
H. O. Havemeyer, Esq., 

Ill Wall Street, New York, N. Y. 
Dear Sir: * * * Referring now to the question of Western Idaho, I informed 
you that Boutelle and Hoover had been operating in the vicinity of Payette and it 
was with extreme difficulty I was able to overcome their operations. After they 
decided to move their operations they went on to the vicinity of Nampa and tried to 
get in there, but I had forestalled them. There were also other parties operating in 
that field, and I have been working for the last 30 days to get these matters adjusted 
so that we could control the situation because these people were offering $5 for beets 
and it would have upset our entire Idaho operations. * * * 

Yours, very truly, Thomas R. Cutler, 

General Manager. 

The testimony in this suit abounds in letters showing how the 
trust discouraged and forestalled the erection of beet-sugar factories 
at Blackfoot, Idaho; Sheridan, Wyo.; Bozeman, Mont.; and in 
numerous other places in Utah, Idaho, Colorado, and Montana. 

We submit that the companies already organized in the above 
beet-sugar district would not welcome any further competition and 
are not so anxious for the development of the beet-sugar industry at 
home by others as they appeared to be when in Washington. 



56 sugak at a second glance. 

Chart No. 42. 

(Page 49.) 

In this chart Mr. Palmer seeks to convey the impression that the 
beet-sugar industry actually originated in the year 1896, so as to 
attribute its subsequent growth and development to the beneficent 
effects of the Dingley bill of 1897, in which the present high rates of 
duty were fixed. As a matter of fact, the industry really began in 
1890 and has never attempted to be self-supporting. As far back 
as 1890 it was subsidized by the Government to the extent of 2 cents 
per pound, as well as paid a bounty in many of the States in which it 
operated. About the time these bounties and subsidies were 
abolished, a duty of 40 per cent ad valorem was imposed for its 
benefit and protection. During the period between 1890 and 1896 
seven factories sprung up. 

During the 14 years, between 1890, the time of its origin, and 1904, 
when "the blight of Cuban reciprocity" went into effect, 43 factories 
had been erected, 40 of which survived. Between 1904 and 1913, 
a period of only 9 years, 36 additional factories have been built, 
according to Willett & Gray, and not 27, as stated by Mr. Palmer. 
As a matter of fact his own figures total 33. This reflects, relatively, 
a greater growth than during the 14 years preceding this so-called 
" blight" of reciprocity. During the years preceding this " blight" 
the total annual production of beet sugar had only grown to 240,604 
short tons; between 1904 and 1913 it has grown to 700,000 short tons, 
or nearly three times as much since Cuban reciprocity, the so-called 
" blight." Such progress does not indicate that it is interfered with 
by either " anticipated legislation" or the "trend of events" to the 
extent claimed by Mr. Palmer. 

Of the 76 beet-sugar factories now in operation, the American 
Sugar Refining Co., or Trust, has been primarily responsible for the 
erection of 27. According to the opinion of Mr. Wallace P. Willett 
before the Hardwick committee, there would not be half the beet- 
sugar factories in existence to-day were it not for the interest of the 
trust in its development. This trust is now interested in beet-sugar 
companies that control and operate 36 factories. Since 1902, when 
it first began to invest in beet-sugar companies, it has been responsible 
for 27 out of the 50 new ones erected in the United States. 

It was stated before the Hardwick committee by the Hon. Joseph L. 
Fordney, Congressman from Michigan, that the fight against this 
"blight of Cuban reciprocity" had been called off by the domestic 
beet-sugar interests because the trust had agreed to take an interest 
in their companies in the event that they would permit of legislation 
that would be favorable to Cuban reciprocity. So despite "real or 
anticipated legislation" and "the trend of national events" the beet- 
sugar industry has expanded from an annual production of 240,604 
short tons to 700,000 short tons in the nine years since this so-called 
"blight," which would be regarded as exceptional progress even under 
most favorable circumstances, and assuredly indicates a prosperity 
and expansion that no longer requires the encouragement of a high 
tariff. 

Nor is it at all likely, in view of their low cost of production, that 
these beet-sugar factories will be turned into "scrap piles." If it was, 



SUGAR AT A SECOND GLANCE. 57 

it is apparent that we have been developing an " illegitimate in- 
dustry." If so, it is certainly time to call a halt, as the consumers 
should not be saddled with an industry that for all time must sell 
its product at high prices. 

In 1898, Mr. William Bayard Cutting, one of the first in this country 
to engage in the production of beet sugar, stated over his signature 
"that the beet-sugar industry is profitable under conditions of 
absolutely free trade, and that the United States, being an agricultural 
country, the industry has nothing to fear even from the annexation 
of Cuba." 

Page 51. 

the high cost o? living. 

In his calculations on this page, Mr. Palmer assumes the amount 
of sugar consumed by an average family of 5 persons in 1910 to be 
299.6 pounds, instead of 268.5 pounds, as maintained in chart No. 6 
and in his deductions regarding the annual cost of the tariff to the 
consumer in chart No. 7. Here the annual direct per capita consump- 
tion of sugar turns out to be 59.92 pounds instead of 53.7 pounds. 
Hence, adopting Mr. Palmer's revision of his former estimates, the 
cost per capita is increased from 72.28 cents, as stated in chart No. 7, 
to 80.65 cents, and with the same amount deducted for revenue pur- 
poses as in chart No. 7, namely, 58.33 cents, the net annual cost to 
the consumer, by reason of the tariff, amounts to 22.32 cents, instead 
of 13.95 cents, as represented in the latter chart. 

Light seems to be dawning upon Mr. Palmer toward the close of his 
treatise. Doubtless, further investigation and treatment of the 
subject would have resulted in further expansion, and it is our hope 
that " Sugar at a Second Glance" will be of some assistance. But it 
does seem as though he should have corrected his first impressions 
and deductions so as to have them conform to his latest revelations 
on this page. 

BASIS OF COST AND CAPITALIZATION OF BEET-SUGAR COMPANIES. 

We have searched in vain for a chart showing how the present 
tariff has enabled the domestic sugar industry to overcapitalize and 
to reap excessive profits at the expense of the American consumer. 

THE BASIS OF COST OF BEET-SUGAR FACTORIES. 

At the tariff hearings before the Payne committee of 1908-9, F. R. 
Hathaway, secretary of the Michigan Sugar Co., estimated the cost 
of a beet-sugar factory investment on the basis of $1,000 per ton of 
daily slicing capacity. (Tariff hearings, Ways and Means Committee, 
p. 3292.) Henry T. Oxnard, of The American Beet Sugar Co., made 
the same basis of estimate before the Hardwick committee. (Hard- 
wick hearings, p. 376.) This was also the estimate of Charles W. 
Nibley, the promoter and organizer of the Amalgamated Sugar Co. 
of Utah. (Hardwick hearings, p. 1090.) 

E. U. Combs, of Colorado, testified before the Hardwick committee 
of an estimate of $367,000 submitted to him for the erection of a 
beet-sugar factory of 600 tons daily slicing capacity, which would be 



58 



SUGAR AT A SECOND GLANCE. 



on the basis of less than $600 per ton instead of $1,000. (Hardwick 
hearings, p. 3283.) 

Before the Hardwick committee, Hon. Joseph L. Fordney, Member 
of Congress from Michigan, and a most uncompromising beet-sugar 
advocate, made this admission: "I think, Mr. Chairman, we have 
it in evidence, over and over again, that the contract price is $1,000 
per ton." (Hardwick hearings, p. 3285.) So the basis of cost of a 
beet-sugar factory may safely be said to be no more than $1,000 per 
ton of daily slicing capacity. 

BASIS OF CAPITALIZATION OF BEET-SUGAR COMPANIES. 

According to the census report of 1910, the combined daily slicing 
capacity of 68 beet-sugar factories in the United States was 52,750 
tons. On a basis of average cost this would permit of a capitalization 
of $52,750,000. These factories, according to the same census report, 
were capitalized for $129,629,000, or two and one-half times their 
cost. These factories produced 457,000 tons of sugar. (See "The 
United States Beet-Sugar Industry and the Tariff," by Prof. Roy 
G. Blakely, of Columbia University, table p. 51.) 

According to the same authority the capitalization per ton of daily 
slicing capacity has been increased from the normal basis of $1,097 
in 1889 to $2,458 in 1909. 

CANE-SUGAR CAPITALIZATION. 

In contrast to this beet-sugar inflation, the total capitalization of 
all cane-sugar refining companies approximates $153,000,000, allow- 
ing a valuation of $12,000,000 for the copartnership of Arbuckle Bros, 
and $1,500,000 for the Henderson Refinery of New Orleans. (See 
table pp. 136-138 of "The Petition of the United States of America v. 
The American Sugar Refining Co., and others," filed in the Circuit 
Court of the United States for the Southern District of New York.) 
This total includes $3,500,000 of stock of the American Sugar Refin- 
ing Co. of New York, $5,000,000 of the Spreckels, and $5,000,000 of 
the Franklin, of Philadelphia, and of $5,128,000 of the National, of 
New Jersey, all owned by the American Sugar Refining Co. of New 
Jersey, or Trust, for the purchase of which a portion of its $90,000,000 
of stock was issued. It also includes $15,000,000 of this $90,000,000 
capital stock issued in 1902 for the purchase of over $23,000,000 
worth of stock in beet sugar companies. Subtracting these amounts 
(in order to arrive at a fair relative comparison) we find: 





Capitalization. 


Production 

W. & G., 

1911. 


Period of 
operation. 


Total eane, about 


$120,000,000 
143,000,000 


Tons. 
2,745,000 
506,000 


Months. 

12 


Total beet 


3 







These cane-refining companies produced over five times as much 
as the beet-sugar factories. 

All of the larger beet-sugar companies now pay a dividend upon 
their common stock (which was originally added as a bonus). The 



SUGAK AT A SECOND GLANCE. 59 

Michigan Sugar Co. now pays 7 per cent upon their common as com- 
pared with 6 per cent upon the preferred. In 1910 this company 
had a surplus of $3,025,000, out oi which it paid a stock dividend of 
$2,000,000, or 35 per cent, and carried $1,025,000 to surplus. Its 
common stock was then quoted in Detroit at 121. It has a daily 
slicing capacity of 4,450 tons and is capitalized for $12,500,000, or 
approximately three times its cost. The American Beet Sugar Co. 
up to last year paid 6 per cent upon $5,000,000 of preferred stock 
only, and last year started in to pay 5 per cent on $15,000,000 com- 
mon. The year before it earned sufficient to pay 13^ per cent upon 
the common and the previous year 10^ per cent. The total daily 
slicing capacity of its combined factories is 5,200 tons. It is capital- 
ized at $20,000,000, or at the rate of about four times its cost. Last 
year this company charged up over $751,000 to " depreciation," or 
about 8^ per cent of its earnmgs. The Great Western Sugar Co. of 
Colorado, pays 7 per cent upon its preferred stock and 5 per cent 
upon its common. In 1910 it had a cash surplus of $5,500,000. It 
has a daily slicing capacity of 9,700 tons and is capitalized for 
$30,000,000, or at the usual rate of more than three times the cost of 
its factories. 

This interesting and illuminating letter in regard to the affairs of 
the above company was written by its president, Chester S. Morey, 
on March 19, 1910, to Washington B. Thomas, who was then presi- 
dent of the American Sugar Refining Co. : 

My Dear Mr. Thomas: Inclosed herewith I hand you copy of the financial exhibit 
and income statement. This is the form in which we expect to publish these state- 
ments, and they will also be used when we make application to list our stock on the 
New York Exchange. 

You will notice that this year, in addition to the regular 2\ per cent depreciation 
which we have been deducting for the last three years, we have set up $1,000,000 in 
depreciation reserve. I do not want this year's earnings to appear as large as they 
would if we had not made this entry. Of course, this can be changed if the board of 
directors does not approve of it. 

You will note that our total surplus is shown by these statements as a little over 
$5,000,000. This does not include any surplus from the Billings Co. , the Great Western 
Railway Co., and other corporations, which really add nearly $2,000,000. 

Our sugar is invoiced at 4 cents, and judging from present market indications there 
is at least $1,000,000 profit that will show up m next year's business. The 
value of our real estate and railroads over and above the amount at which they are 
carried is at least $5,000,000, so that the actual surplus is nearer $9,000,000 than 
$5,000,000. 

Am pleased to say that at some of our factories the farmers are signing up acreage 
and feel more encouraged than I did a week ago. 

The details of these statements I will bring with me when I come to the stock- 
holders' meeting. 

Owing to the high price of sugar, the year following the date on 
which this letter was written was unquestionably even more profitable 
to the Great Western Sugar Co. than any of the preceding years, 
which seem to have yielded abnormal profits, as this company, only 
organized in January, 1905, had by March 19, 1910, accumulated a 
surplus of $9,000,000 in addition to having paid regular yearly divi- 
dends. Yet these are the " interests" who whine at the doors of 
Congress in Washington that " ruination" stares them in the face if 
the tariff on sugar is reduced ! 

The beet-sugar companies are enabled to do this, because they are 
not obliged to base their selling price to the consumer upon their cost 
of production (which is around 3 cents per pound) in contrast to 



60 SUGAR AT A SECOND GLANCE. 

Eastern cane refiners' average of more than 4J cents per pound (a 
full %i cents of which is due to the tariff). Thus the beet-sugar com- 
panies capitalize their cheaper cost of production, freight, and tariff 
protection at the expense of the consumer with no thought of sharing 
any advantage with the farmer. The sugar-beet companies deal 
with the latter upon a free-trade basis for his beets and charge the 
consumer upon the highest protective basis for their product. Hence 
little sympathy should be wasted upon this tariff -favored element on 
account of the disposition shown to exploit the benefits so generously 
conferred at the expense of the public at large whom Congress 
represents. 

We now propose to show that the main use they make of tariff 
concessions (which they should in fairness share with the farmer) is 
to float watered stock and promote overcapitalization in their several 
companies. 

LOWRY TARIFF PLAN. 

The present tariff on sugar enhances the price for the producers in 
Porto Kico, Hawaii, and the Philippines, so that the owners of the 
mills (who as a rule live in the States) are making an enormous profit 
at the expense of the American consumer, but the sjigar industry in 
these islands, before they became a part of the United States, flourished 
under conditions of absolute free trade. 

It is therefore apparent that any tariff that we might have would 
enhance the value of the product of these islands by the amount of 
the tariff, so that it is clear that any tariff means just so much extra 
profit to those engaged in producing sugar in these islands. 

The tariff rate we propose is equal to $10 to $12 per ton. 

Let us now consider how our domestic beet sugar industry would 
fare under the rate which we propose. 

It is well known in the trade that where factories are properly 
located and thoroughly equipped there should be no difficulty in pro- 
ducing beet sugar at 3 cents per pound (see Hardwick hearings) , and 
the beet men themselves boast of this when seeking financial assist- 
ance. 

Taking their own figures, the cost of producing and selling in good, bad, and cents 
indifferent factories, the Hardwick Committee shows that the average cost per lb. 

was only 3. 54 

Messrs. Wifiet & Gray show that the average New York refiner's price for the 

past seven years on refined sugar has been 4. 98 

The Department of Commerce and Labor, Bureau of Statistics, No. 240, page 
517, shows that the average cost per pound, free on board in foreign coun- 
tries, of the raw sugar imported, 1905-1911, inclusive, was 2. 378 

Add the freight, to get the average cost laid down at United States ports, say.. . 14 

Making the in-bond price delivered at United States ports 2. 518 

Add the duty which we propose on 96° test, 60 cents on full duty sugar and 48 

cents on Cuban importations, making average rate actually paid, say 53 

Making refiner's first cost, duty paid 3. 048 

Add the margin between price paid by refiners for raw sugar and their selling 

price on refined, the past seven years 859 

Making refiners' average selling price under proposed new rate (New York) ... 3. 907 

The beet-sugar factories are located in the interior and sell their 
sugar above the New York price (see bulletin No. 12), but as this 
advantage is partly offset by the fact that the trade will not pay as 
much for beet sugar as for cane, we have not taken this advantage 
in price into consideration in this calculation. 



SUGAE AT A SECOND GLANCE. 61 

We find that the rate we propose would give beet-sugar factories 
who produce at 3^ cents per pound a profit, as a direct result of the 
tariff, of 0.407 cent per pound, or $8.14 per ton. 

And those properly located and equipped, and who produce sugar 
at 3 cents, a profit of 0.907 cent per pound, or $18 per ton. 

A cane refinery in New York is very glad to make an average profit 
of one-eighth to three-sixteenths cent per pound. 

As the average price of granulated under the present tariff has been 
4.98 cents per pound, the saving to the American people under the 
proposed rate would be over 1 cent per pound, or over $75,000,000 
on the amount of sugar consumed in 1911. 

It is therefore apparent that the rate we propose will amply pro- 
tect, for all legitimate purposes, the sugar industry of Porto Rico, 
Hawaii, Philippines, and also our domestic beets. It will only pre- 
vent the overcapitalization of beet-sugar plants and the improper 
location of factories where natural conditions are not such as to pro- 
duce the best results. The industry would be on a much better 
footing if the tariff were revised so as to prevent both of these condi- 
tions, which are fundamentally so unsound. 

In all our calculations we have provided for the beet grower to 
receive the same price that he now receives for his sugar beets. So 
that while there is ample room for disputing some of the statements 
regarding the farmers' " indirect benefits" for the purpose of this 
argument, we can admit all that is claimed by the beet-sugar fac- 
tories. 

LOWRY REVENUE PLAN. 

Another feature to be considered in connection with the sugar tariff 
is the revenue feature. In 1911 the high tariff which we have on 
imported sugar produced for the Government about $52,000,000, but 
this money was collected on only about 50 per cent of the amount 
of sugar which we consumed, as only this much was imported from 
foreign countries and paid duty. The balance comes from Hawaii, 
Porto Rico, the Philippines, and our domestic beet and cane produc- 
tions. The selling price of this sugar is based on the in-bond value of 
foreign sugar plus the duty, and its value is enhanced at least to the 
extent of the tariff, so that a like amount ($52,000,000) to that col- 
lected by the Government is handed to these producers as an indirect 
subsidy. 

Because the tariff rate on sugar is so high, the $52,000,000 collected 
by the Government as a revenue from one-half of the sugar we use 
is 17 per cent of the entire customs revenue of the United States. 
Is it right that a single necessity of life should be called upon to bear 
such a heavy part oi the burden ? 

There is a great difference between a protective tariff and a revenue 
measure. The protective rate which we propose would have pro- 
duced for the Government in 1911 about $18,000,000 in revenue. 
It seems to us that in doing this sugar is producing its proper share, 
but if our legislature should determine that sugar alone must pro- 
duce more revenue, then all the sugar which we consume should snare 
in producing this revenue, and we should adopt the revenue or " con- 
sumption tax" justras has been done all over Europe. 

Every time a tax of one-fourth cent per pound is placed on the total 
amount of sugar consumed in the United States about $19,000,000 



62 SUGAK AT A SECOND GLANCE. 

is produced. This is equal to the amount produced by placing a tax 
of one-half cent per pound on the imported sugar, but it only increases 
the price of sugar to the consumer one-fourth cent instead of one-half 
cent, as when the latter method is followed. 

If, in addition to the $18,000,000 or more collected on imports, 
$19,000,000 more revenue is needed from sug^r, then require the 
refiners of both cane and beet sugar in the United States to pay a tax 
of 25 cents per 100 pounds on their production. This would be purely 
a revenue measure, like the countries of Europe have adopted as a 
proper way of raising revenue, but at a much lower rate, and would 
be levied purely from a revenue standpoint, and could be dropped 
whenever the revenue was not required. 

Under such a provision there need be no tax on raw sugar made in 
our insular possessions, Porto Rico, Hawaii, and the Philippines, or 
in Louisiana, as the tax of 25 cents per 100 pounds would be paid on 
these sugars by refiners before they were put on the market. It 
would, however, be necessary to have a provision in the law that any 
refined sugar they might make or any raw sugar imported from any 
source for direct consumption would have to pay the revenue or 
''consumption tax" of 25 cents a hundred pounds. 

Allowing for a proper increase of, say, 10 per cent in consumption, 
such a revision of the sugar tariff would have produced in 1911 a 
revenue for the Government of about $39,000,000, and has the added 
advantage that it will yield more revenue each year as the consump- 
tion increases. Under the present ruling this is reversed; and not- 
withstanding the fact that our consumption has increased over 25 
per cent in the last seven years, the Government derives less revenue 
from sugar now than it did seven years ago. 

Such a readjustment as we propose would materially reduce the 
price of sugar to the consumer, give a greater protection to our 
domestic industry than is granted by Germany, Austria, France, 
Holland, or Belgium, where beet sugar is produced so extensively, 
and afford the Government of the United States a very handsome 
revenue. 

This method of producing revenue is the one followed by the various 
countries of Europe, where beet sugar is produced so extensively. 
These countries have adopted what is called a "consumption tax," 
which all sugar, whether of foreign or domestic origin, is required to 
pay. In Germany this tax amounts to 1.51 cents per pound; in 
France, 2.36 cents per pound; Austria, 2.39 cents per pound; Hol- 
land, 4.82 cents per pound; and Belgium, 1.75 cents per pound. 
Such heavy taxes as these would be entirely unnecessary in this 
country, but it would be perfectly feasible for us to collect all the 
revenue required from sugar in this way, and the rate could be 
reduced or increased, as warranted by the situation. 

A favorite plan of those who profit by our tariff is to add the duty 
and the consumption tax, and hold this up as the "protection" given 
the beet-sugar industry in Europe. They will say, "The tariff in 
Germany on raw sugar is 1.98 cents." They add to the 47-cent rate 
of duty the consumption tax of $1.51, and get $1.98; but they do not 
say that all sugar produced in Germany must also pay the consump- 
tion tax of $1.51 so that the protection is only the tariff rate of 0.47 
cent per pound. 



SUGAR AT A SECOND GLANCE. 63 

This is, of course, only one of the many ways of getting tariff favors 
by false information. 

TARIFF HANDICAPS TO EXPORT BUSINESS. 

Our domestic sugar industry contends that the tariff is not a 
handicap to a domestic manufacturer or preserver doing an export 
business. This is not a fact. It is a serious handicap. (Senate 
Hearings, pp. 457-458.) 

The matter of collecting drawback is a serious proposition to the 
small manufacturer. He can not afford to be without his money 
three, six, or nine months, as is required in getting settlements of 
drawbacks from the Government. These drawbacks are collected 
through the customhouse brokers in New York, and a great deal 
of that business is done on the basis that the customhouse brokers 
shall be paid a percentage of the amount collected. 

The exporter is required to get certificates of origin from the 
refiner, and of necessity there is a great deal of red tape connected 
with these drawbacks. 

Another serious difficulty is that when a manufacturer purchases 
sugar he does not know its origin. He may manufacture his product 
from that sugar, quote a price for export based on the assumption 
that he is going to receive drawback, secure the business and make 
the shipment, after which he makes application to the refiner for a 
certificate of origin only to find that the sugar has been manufactured 
from Porto Rican, Louisiana, Hawaiian, or Philippine raw sugars, 
on which no duty has been paid, and therefore no drawback can be 
collected; so that the manufacturer attempting to do this export 
business is simply out that much money. 

To the knowledge of the writer this has often happened, and under 
such conditions it does not take long to discourage an export business. 
These handicaps were impressed on the Ways and Means Committee 
by Ex-Gov. Bert M. Fernald, president of the National Canners' 
Association, who as a part of his argument for a material reduction 
in the tariff on sugar presented the following letter from the Canners* 
League of California: 

San Francisco, Cal., January 9, 1913. 
The Ways and Means Committee of Congress, Washington, D. C. 

Gentlemen: The Canners' League of California, an organization representing 
practically all the fruit and vegetable canners of this State, giving employment to 
nearly 30,000 people during the packing season, asks for a material reduction in the 
tariff on raw and refined sugar. 

It is our opinion that the sugar industry, if conducted as a legitimate manufacturing 
enterprise, whether in Hawaii, Porto Rico, or on the mainland, requires no protection. 

It is our opinion that as a revenue producer the present tariff lays a heavy and un- 
reasonable burden upon the consumer, compelling him to pay an unnecessarily high 
price on domestic sugar, which yields no revenue to the Government. 

It is our opinion that in our endeavor to extend our foreign markets we are seriously 
handicapped by the present duties on sugar, being at a serious disadvantage as com- 
pared with British exporters. If it be contended that the drawback law is an offset, 
it can be successfully maintained that the law is inadequate for the reason that our 
manufacturing must be done during the fruit season, before the nature and extent of 
foreign markets can be fairly estimated. The rules of the Treasury Department 
require us to file at the beginning of the packing season a notice of intent to manu- 
facture, showing the exact quantity of each grade of each variety of fruit to be packed 
with imported materials. However carefully these estimates be made, they never 



64 SUGAR AT A SECOND GLANCE. 

fit the actual market conditions, and canners having paid the higher price for duty- 
paid material usually find themselves "long" on some grades and varieties for which 
there happens to be no export demand, and such goods must accordingly be sold to 
the domestic trade without benefit of drawback and at a loss. They also find them- 
selves " short" of goods available for drawback on other grades and varieties for which 
there is demand, and for which there are no goods remaining in stock packed with 
imported materials. 

In behalf of an industry of serious commercial importance to the laboring and the 
farming classes, as well as to the manufacturer, we respectfully urge this reduction, 
givmg full assurance ©f our willingness to give up any measure of protection that the 
present tariff may afford to the canned-food industry if only we be given the oppor- 
tunity to secure our sugar and our tinplate at the lower prices which we believe will 
prevail in the event of the reduction of the tariff. 

We have the honor to be, very respectfully, yours, 

Canners' League op California. 
Henry P. Durand, Secretary. 

A reduction of the tariff on sugar would not end with the direct 
benefits derived by consumers and those handling sugar, such as 
jobbers, retailers, transportation companies, refiners, etc., but it 
would also widen the market for American canners, preservers, and, 
other industries, in which sugar is an important factor, who are at 
the present time unable to do much in the way of an export business 
because of the high prices they are forced to pay for their sugars. 

A material reduction in the sugar tax would at once enable our 
canners to greatly increase their exports, thus creating a demand for 
the fruits, berries, etc., of our farmers, which now go to waste for 
lack of a market. It would likewise increase the demand for all 
products used in these industries, such as tin plate, glassware, labels, 
cases, etc. The advantages to our farmers and people generally 
from the increased markets for these products are certainly worthy 
of consideration. 



BEET SUGAR AND THE TARIFF. 

By Prof. P. W. Taussig, chair of economics, Harvard University. 



Summary. 

growth since 1890 concentration in the far west — climatic 

advantages of the arid region intensive cultivation re- 
quired a large labor supply needed; an agricultural pro- 
letariat ? the sugar manufacturers active in procuring 

the labor little beet sugar in the central west the 

explanation is in the principle of comparative cost: corn 

is more profitable the situation in michigan the beet* 

sugar manufactories — can the argument for protection to 
young industries be advanced? 

[Quarterly Journal of Economics, Harvard University, February, 1912.] 

The beginnings of this growth of beet-sugar making fall in the 
period during which the tariff act of 1890 was in effect. Barring a 
slight amount from one or two California enterprises, no beet sugar 
at all had been produced before that date. The act of 1890, it will 
be remembered, admitted sugar free of duty, but gave domestic sugar 
makers a bounty of 2 cents a pound. It would seem obvious that 
this put the domestic producers in no better position than before. 
The previous duty of 2 cents being abolished, their sugar fell in price 
by that sum. They simply got the bonus outright, instead of in the 
indirect form of an enhancement of price. Nevertheless, the bounty 
of 1890 appears to have had a stimulating effect on the beet-sugar 
industry. There may be a psychological influence from the direct 
payment, just as there is a vast difference in the effect on people's 
state of mind between collecting taxes directly and collecting them 
through levy on producers of commodities, or merchants, who recoup 
themselves by higher prices. Probably no less effective than the 
bounty at the start, and more effective as time went on, was the 
propaganda of the Department of Agriculture. That department has 
preached beet sugar in season and out of season; has spread broadcast 
pamphlets dilating on the advantages of beet growing for the farmer 
and giving minute directions on methods of cultivation; has main- 
tained a special agent, who kept in touch with the manufacturers 
and farmers and annually reported on the progress of the industry. 
The result was familiarity with the possibilities throughout the 
country, the removal of all obstacles from inertia and ignorance, and 
a rapid development in all regions where there was a promise of 
profits. 

What, now, are the regions in which the profit has been such as to 
lead to great development? The accompanying tabular statement 

S. Doc. 23, 63-1—5 65 



66 



SUGAK AT A SECOND GLANCE. 



shows what the situation has been since 1900, the period during which 
the growth has been most marked and its geographical distribution 
most easily followed: 

Beet-sugar product in the United States. 
[In million pounds of sugar.] 





Total. 


Cali- 
fornia. 


Utah. 


Colorado. 


Michi- 
gan. 


Wiscon- 
sin. 


Other 
States. 


1899-1900 


163 
172 

365 

438 

466 

470 

635 

970 

852 

1,025 

1,120 

1,019 


85 
57 
140 
159 
136 
93 
144 
178 
180 
255 
280 
291 


19 
17 
28 
38 
46 
57 
48 
82 
93 
98 
77 
76 


2 

13 

45 

78 

89 
111 
209 
343 
245 
299 
206* 
206 


33 
55 
. 105 
109 
128 
104 
122 
177 
171 
212 
278 
260 




24 


1900-1901 




30 


1901-2 


6 
8 
11 
22 
27 
36 
37 
34 
36 
38 


41 


1902-3 


46 


1903-4 


56 


1904-5 


83 


1905-6 


85 


1906-7 


154 


1907-8 


126 


1908-9 


127 


1909-10 


243 


1910-11 


148 







One fact is obvious on a cursory inspection of these figures. The 
beet-sugar industry is in the main massed in the far West — in Cal- 
ifornia, Utah, Colorado, and the adjacent region. The agricultural 
belt of the Central States has a very slender share. Only one State 
in this part of the country, Michigan, makes a considerable contri- 
bution to the supply. Wisconsin adds a very little. No other State 
in the central region has more than one beet-sugar factory. Barring 
Michigan, the production of beet sugar may be said to be confined to 
the Rocky Mountain and Pacific States. In 1909 the four States of 
California, Colorado, Utah, and Idaho contained 250,000 acres out of 
a total of 420,000 used for beet culture and produced nearly 700,000,000 
pounds of sugar out of a total of 1,000,000,000. 

The explanation of -this geographical concentration does not lie in 
any obstacles from climate or soil in other parts of the country. The 
beet flourishes over a very wide area. An instructive pamphlet 
issued by the Department of Agriculture shows the zone in which 
the sugar beet may be expected to " attain its highest perfection." 
This zone or belt, 200 miles wide, starts at the Hudson and sweeps 
across the country to the Dakotas, turns southward through Colorado, 
New Mexico, and Arizona, and then, turning again, proceeds west 
and northwest through California, Utah, Idaho, and the Columbia 
Valley. It includes a great part of the north central region. Yet 
in this, the most important and productive agricultural region of the 
country, there is virtually no beet growing or sugar making, except, 
as just mentioned, in Michigan. The climatic and agricultural pos- 
sibilities are not turned to account until the far West is reached. 

Two circumstances are dwelt on by those well informed concerning 
the conditions favorable to beet growing in this western region — the 
climate and the special advantages of irrigation. 

The variety of the beet suitable for sugar making flourishes in a 
cool climate, but it needs plenty of sun. " Abundance of sunshine 
is essential to the highest development of sugar in the beet. Other 
things being equal, it may be said that the richness of the beet will 
be proportional to the amount — not intensity — of the sunshine." 
Evidently the cool region of cloudless sky in the arid West, including 



SUGAR AT A SECOND GLANCE. 67 

the high-lying parts of Arizona and New Mexico, meets this condition 
perfectly. 

Again: "In respect to moisture, the sugar beet is peculiar in some 
respects. * * * There are three periods in the lite history of the 
sugar beet which demand entirely different treatment so far as 
moisture is concerned: (1) The germinating or plantlet period, (2) the 
growing period, (3) the sugar-storing period." During the first "the 
beet needs sufficient moisture and warmth to germinate and start it, 
but never an excess." During the second "the beet needs little, if 
any, moisture." During the third, or sugar-storing period, "the 
plant should be given no water. The conditions desirable at this 
period are plenty of light and dry, cool weather. If the beet is given 
moisture to any considerable extent, it will be at the expense of both 
sugar and purity." 

It is clear that the irrigated regions of Colorado, Utah, Idaho, and 
Montana supply just the right combination of climate and moisture — 
cool temperature, abundant sunshine, moisture as needed, absence of 
moisture when harmful. Hence Colorado and Utah are described as 
the ideal beet-sugar States. "Considering everything, Utah is the 
ideal beet-sugar State. * * * Its natural conditions are quite 
similar to those of Colorado." In Colorado 12 to 25 tons of beets to 
the acre are readily secured; even in the early days 15 to 17i tons 
were got on the average; whereas in European countries not only is 
the tonnage per acre less, but the sugar content smaller. Some of 
the districts of California have the required combination of soil and 
moisture without irrigation or with little irrigation. California has 
some further advantages. Its equable climate enables the beet-sugar 
"campaign" to be spread over a longer period than elsewhere, and 
its beets have a very high sugar content. 

Contrast these conditions with those of a State like Michigan, where 
the annual precipitation is considerable and where the distribution 
of the precipitation depends on the accidents of the season. In 1909 r 
for example, the agent of the Department of Agriculture reported 
that "On the whole, the weather conditions in the State during the 
past year were rather unfavorable. The spring was cold, wet, and 
backward, but more favorable weather prevailed during the growing 
season, though there was considerable tendency to drought. The 
weather was especially favorable for harvesting beets. This is a 
critical period. Dry weather lessens the work and improves the 
beets." In 1901, 1902, and 1903 there were bad seasons in Michigan. 
"There was considerably more rain than was desirable, necessitating 
expensive work in weeding and cultivation. The cold, wet rains of 
the fall delayed the harvesting and belated the work of the sugar 
factories." In 1904, on the other hand, the season happened to be 
favorable. Evidently the Michigan farmer is at a disadvantage be- 
cause of the uncertainties of the weather. The farmer of the irrigated 
arid region can always count on abundant sunshine and can apply 
moisture exactly as needed. 

For all these reasons "Michigan farmers can not grow as high & 
tonnage as they do in the Western States under irrigation. Their 
beets are not naturally of as high a quality, and probably they never 
will be." The same holds of other parts of the north central region, 
"In Iowa the beets have not been as high in quality as those grown, 
in California, Colorado, or Idaho." 



68 SUGAR AT A SECOND GLANCE. 

Turn, now, to another aspect of the problem — the kind of culti- 
vation required for beet raising. The situation is the same as I 
described it in 1889. Intensive culture and much hand labor are 
necessary. Prof. Shaw, in his valuable reports on the industry in 
California, has more than once used the phrase: "The growing of 
beets is not agriculture, but horticulture." All the manuals and 
pamphlets insist on the need of elaborate preparation, minute care, 
much labor directly in the fields. The planting of the seed does, 
indeed, take place by drills, the plants coming up in continuous 
rows. But alter this first operation painstaking manual labor is 
called for. When the young shoots come up, they need first to be 
blocked, then thinned. " Blocking' ' means that all the beets in the 
rows are cut out by a hoe, except small bunches about 10 inches 
apart. These bunches are then "thinned." Every plant is pulled 
out by hand except one, the largest and healthiest. "Great care 
should be exercised in this work, and by careful selection all the 
inferior plants should be removed. * * * When thinning, it is 
a good plan to give the ground a thorough hand hoeing." Through- 
out the growing period the beets must be cultivated, partly with a 
horse cultivator, partly with the hand hoe. "The cultivator and 
the hoe should be used alternately until the beets are too large for 
horse cultivation without injuring them. Hand laborers should 
continue to go over the beet field, pulling the weeds and grass that 
may have persisted." 

Essentially, the same situation appears when harvesting is reached. 
The beets may be first loosened by a plow and by a lifter, but each 
individual beet must be pulled out by hand. Then they are knocked 
together gently to remove the adhering dirt. Finally, they are 
"topped;" that is, the neck and leaves are cut off with a large knife. 
"The removal of the tops of the beets is a tedious process, which in 
Europe is performed by women and children. * * * Constant 
supervision is necessary in this work." 

No machinery has been devised that serves to dispense with the 
large amount of hand labor called for. "Several attempts have 
been made to construct a mechanical device by which the beets can 
be topped, thus saving a large expense, and perhaps a successful 
device of this kind may some day be invented." So far as is known 
at the present time, however, this process has not been successfully 
accomplished by machinery, and the topping must still be done by 
hand. "Inventive ingenuity in Europe, and especially in America," 
said the special agent of the Department of Agriculture in 1906, 
"has been directed to planning a harvester which will do away, as 
far as possible, with this expensive handwork. * * * It can 
not be said that any of these newly devised implements works suc- 
cessfully in all soils." In 1909 he reported that "these machines 
iire not now in general use, but their use is increasing," and he still 
laid stress on the need of elaborate hand cultivation. 

It follows that the successful growing of the sugar beet calls for a 
large amount of monotonous unskilled labor; no small part of it ; 
labor that can be done by women and children, and that tempts to 
their utilization. In the documents of the Department of Agri- 
culture there is constant reference to the peculiar labor problem 
confronting the farmer who sets out to raise sugar beets. "As a 
rule, the farmer, if he grows beets to any extent, does not have on 



SUGAK AT A SECOND GLANCE. 69 

his farm sufficient labor to take care of the work of thinning, bunch- 
ing, hoeing, and harvesting the sugar beets/' Not only does the 
typical American farm and farm community lack the number of 
laborers required; the labor itself is of a kind distasteful to our 
farmers. "Thinning and weeding by hand while on one's knees is 
not a work or posture agreeable to the average American farmer. 
Bending over the rows and crawling along them on one's hands and 
knees all day long are tilings that the contracting farmer is sure to 
object to as drudgery. * * * Our farmers ride on their stirring 
plows, cultivators, and many implements." As was remarked by 
one of the witnesses before the Ways and Means Committee at a 
tariff hearing: "The thinning and the topping of the beets it is 
pretty hard to get our American fellows to do, and they prefer to 
hire the labor and pay for it." The Kansas State Board of Agri- 
culture informs its constituents: "If the American farmer is to 
realize all possibilities in raising sugar beets he will do so through 
his ability as a superintendent and not as a drudge." 

The manner in which this need of extra labor has been met is 
instructive not only as regards the beet-sugar situation itself, but 
also as regards the general trend of industry in the United States 
during the last generation. 

Almost everywhere in the beet-sugar districts we find laborers 
who are employed or contracted for in gangs; an inferior class util- 
ized and perhaps exploited by a superior class. The agricultural 
laborers in the beet fields are usually a very different set from the 
farmers. On the Pacific coast they are Chinese or Mexicans. 
Except in southern California, where the Mexicans are near at 
hand, most of the work is done by Japanese under contract, there 
being usually a head contractor, a sort of sweater, who undertakes 
to furnish the men. In very recent years Hindoos (brought down 
from British Columbia) also have appeared in the beet fields of 
California. In Colorado "immigrants from Old Mexico compete 
with New Mexicans (i. e., born in New Mexico), Russians, and 
Japanese." Indians from the reservation have been employed in 
Colorado, and boys have been sent out under supervisors from the 
juvenile court of Denver. At one time convict labor was used in 
Nebraska. 

In some parts of Colorado, in Montana, and at the beet fields of 
the single factory in Kansas Russian Germans are employed. These 
curious and interesting people are Germans who were imported into 
Russia by the Empress Katherine. They persistently maintained 
their race and language and religion. In recent years they have 
been driven from Russia by persecution. They now center about 
Lincoln, Nebr., and are shipped under contract to the beet fields, 
where they are assiduous and much-prized workers. They are much 
more welcome than the fickle Indians and Mexicans; more welcome, 
even, than the Japanese, who are quick and capable, but often break 
their contracts. The German Russians camp in whole families at 
the beet region for the summer; men, women, and children toil in 
the fields. In Michigan the main labor supply comes from the 
Polish and Bohemian population of Cleveland, Buffalo, and Pittsburgh. 
The circulars issued by the Department of Agriculture and by the 
State boards and bureaus repeatedly call the attention of the beet 
farmers to the possibility of employing cheap immigrants. The 



70 SUGAK AT A SECOND GLANCE. 

troublesome labor problems, it is said, need not cause worry. Here 
is a large supply of just the persons wanted. ''Living in cities there 
is a class of foreigners — Germans, French, Russians, Hollanders, 
Austrians, Bohemians — who have had more or less experience in 
beet growing in their native countries. * * * Every spring sees 
large colonies of this class of workmen moving out from our cities 
into the beet fields.' 7 

The sugar manufacturers who buy the beets and make the sugar 
in their factories play a large part in bringing this labor to the fields. 
Indee*d, they play a large part in every phase of the industry — on its 
agricultural side as well as on its manufacturing side. They supply 
seed, give the farmers elaborate directions on methods of cultiva- 
tion, employ supervisors to visit and inspect the farms, and to spur 
the farmers to the needed minute care. Of necessity they test the 
beets at the factory and pay according to sugar content, and they 
often undertake to provide the labor. Sometimes the factories 
contract to attend to the field labor themselves, receiving from the 
farmers a specified price — so much for bunching and thinning, so 
much for each hoeing, so much for topping. The farmers, then, 
have nothing to do but supply "reasonable" living accommoda- 
tions. More often farmers not thus provided for secure their labor- 
ers through contractors at a fixed price of so much (varying from 
SI 5 to $20) per acre for all the work, these middlemen being hunted 
up or selected for the farmers by the factory managers. Such 
"sweaters" make a profit from their subcontract with the field hands, 
the system being open to the possibilities of overreaching, which are 
too familiar under such arrangements. 

All this is part of the transformation which has been wrought in 
so many parts of our social and economic structure during the last 
quarter of a century by the vast inflow of immigrants. Manufac- 
tures have been most obviously affected by it. Our textile trades, 
the iron and steel industry, the glass manufacture, have, in greater 
or less degree, adjusted their methods and machinery to the new 
labor supply. The tariff situation has been modified. Not a few 
industries can maintain themselves without tariff aid, or with little 
aid, which formerly could allege more plausibly the need of high 
duties. Agriculture, also, is feeling the influence of the new con- 
ditions. Laborers from the congested foreign districts of the cities — • 
Italians, Bohemians, u Huns," "Polaks," Russians — make their way 
to the market gardens surrounding the cities, to vegetable districts, 
such as that of the Chesapeake Peninsula, to the cranberry fields of 
New Jersey, and do the hard work for the shrewd Yankee farmers. 
Possibly these field hands are on the way to the acquisition of land 
through their savings. Such persons as the Russian Germans who 
work in the beet fields are not likely to remain long in their present 
semiservile state. These are doubtless progressing toward land 
ownership. Possibly the same upward movement will be achieved 
by many members of the other races. But certainly, for the time 
being, the conditions are socially and industrially unwelcome. They 
are not dissimilar to those of the Sachsengangerei of ill repute in 
eastern Germany. They are very different from the conditions 
which we think of as typical of agriculture in the United States. 
There is an agricultural proletariat in the beet fields. 



SUGAR AT A SECOND GLANCE. 71 

As yet, however, the main agricultural region of the United States — 
the great central region in which are the wheat and corn belts — has 
been little affected. Here we still find extensive cultivation, agri- 
cultural machinery, the one-family farm. It is true that during 
the harvest season there is a heavy demand for agricultural laborers, 
and that this is satisfied by laborers who may be said to constitute 
an agricultural proletariat. It is true, also, that, the stage of pio- 
neer farming has been passed, or is rapidly being passed, that rota- 
tion is becoming more systematic and skillful, the land more valuable, 
cultivation more intensive. Nevertheless, this remains the region 
of the one-family farm. The farmers "ride on their stirring plows 
and cultivators," and in this way are able to do most of the work 
on their lands for themselves. 

Throughout the corn belt there is no sugar-beet industry of any 
moment; yet the corn belt is largely the same as the •potential beet- 
sugar zone. The explanation seems to me clear — it pays better to 
raise corn. In the language of the economists, there is a compara- 
tive advantage in corn growing. This grain is peculiarly adapted 
to extensive agriculture. It also lends itself readily to the use of 
machinery; corn can be " cultivated" between the rows by horse 
power. It is a substitute for root crops, and can be rotated steadily 
with small-grain crops. It is a direct competitor with the sugar 
beet for cattle fattening. The advocates of beet raising always 
lay stress on the value of the beet pulp, the residue at the factory 
after the juice has been extracted, for cattle feeding. But corn is 
at least equally valuable for the purpose and the typical American 
farmer raises it by agricultural methods which he finds both profita- 
ble and congenial. One man can grow 40 acres of corn. He can 
plant only 20 acres of beets; and these he can not possibly thin and 
top. In Iowa "the farmers are progressive, successful, and satisfied. 
In fact, this has been the main obstacle to installing the sugar indus- 
try there. The farmers have not shown a disposition to grow the 
beets. When the farmers are advised that beet culture is accom- 
panied with considerable hard work, factory propositions usually 
succumb to the inevitable. The farming class of the State is accus-- 
tomed to the use of labor-saving implements in the fields." And 
yet Iowa "has the quality of soil and the climatic conditions neces- 
sary for producing a large tonnage of beets." 

ft is true that Michigan, and Wisconsin also, are outside the corn 
belt. Except along the southern edge of these States, the grain 
does not ordinarily mature. But corn still remains a formidable 
competitor of the sugar beet, in its use through ensilage. It is cut 
green, stored in the silos, and so is available for cattle feeding. It 
continues to be available in rotation with other grain and with grass. 
During the last two decades Wisconsin has become a great dairy 
State. "The pasture, hay, and corn lands of the State form the basis 
of the live-stock industry." Here there is a profitable system of 
agriculture in which there is no need of the minute attention, the 
elaborate cultivation, the concentrated labor, which are required 
for the sugar beet. 

To sum up: Beet growing calls for highly intensive cultivation. 
As I stated in 1889, it is not adapted to the typical agricultural con- 
ditions of the United States. On the irrigated lands, where its de- 
velopment has been so surprising, the conditions are not typical. 



72 STJGAK AT A SECOND GLANCE. 

There is likely to be intensive cultivation in any case. The land is 
comparatively expensive — counting the cost of irrigation as part of 
the cost of the land. Hence the land must be called on for a larger 
gross product, through garden crops and the like. Add the special 
climatic advantages of the arid region, and it is easy to see why beet 
culture is found advantageous. But through the greater part of 
the theoretical beet-sugar belt, and especially in the corn belt, more 
extensive methods of using the soil pay better. Beet growing finds 
no place in the region of the one-family farm. 

No doubt it is true that agriculture in the north central district, 
and to some degree throughout the United States, is in a stage of 
transition. Corn and the small grains, though they remain the 
fundamental crops, are being supplemented by root crops, and there 
is more and more resort to dairying. How far this transition will 
be carried musfc depend on the pressure of demand for agricultural 
produce in consequence of the growth of population, and on the 
social forces which influence land ownership and land tenure. The 
conditions of labor supply are also important; and these may influ- 
ence the development of agriculture as profoundly as they have 
that of manufactures. But as yet it is only under exceptional cir- 
cumstances that the American farmer will find it profitable to carry 
on such intensive cultivation as beet growing requires. 

The relation of the beet-sugar industry to the tariff presents, on 
its agricultural side, one of the many cases of differing costs. If the 
formula is to be applied which is now so much in vogue — protect in 
proportion to the higher cost of production in the United States — ■ 
the legislator must face the dilemma that the protection which 
suffices for one set of producers more than suffices for others, and in 
that sense is excessive. The situation, of course, is one familiar in 
the extractive industries, and in all industries in which there are 
permanent causes of variation in cost. It costs more to produce 
beets in Michigan and Wisconsin than it does in California and 
Colorado. The beet-sugar producers of the West can turn out sugar 
profitably at a price of somewhere near 3 cents per pound. Those 
of Michigan find it hard to extract a profit at 4 cents a pound. 
The beet-sugar industry of the far West, under the present tariff- 
raised price of sugar, is steadily reaching eastward with its product, 
and has become a formidable competitor both of the Michigan in- 
dustry and of the imported and domestic cane sugar. 

The Michigan sugar makers hence are uneasy about the future; 
and they plead strenuously for consideration to their vested interests. 
It must be admitted that the plea is in one regard of exceptional 
force. Not only has the general policy of protection been long 
maintained by Congress, and investment in accord with it encour- 
aged; but, as one of the witnesses before the Ways and Means Com- 
mittee said in 1909, "the investment which our company made in 
the sugar business was made on the invitation and urgent advice of 
the United States Government through its Department of Agricul- 
ture." It is a serious responsibility which the department has thus 
taken on itself. Its zeal too often has been indiscriminate. Its 
propaganda has rested, in part at least, on a crudely mercantilist 
principle — on the assumption that it is desirable to produce within 
our own borders anything and everything that can possibly be pro- 



SUGAR AT A SECOND GLANCE. 73 

duced there, and that a tariff pohcy based on this assumption will 
be maintained indefinitely. 

A question in some respects different is presented by the beet- 
sugar factory, which buys the beets from the farmers and makes the 
sugar. Here there is what the business world calls " a straight manu- 
facturing proposition." Whether the manufacturing of sugar can 
be done to advantage in the United States depends on the same con- 
ditions as in other manufactures. It is much affected by the oppor- 
tunities for using machinery and for the exercise of American in- 
ventive and engineering capacity in improving machinery. Such 
evidence as I can get indicates that, so far as this branch of the 
industry is concerned, the conditions are not unfavorable to its 
successful prosecution, with little need, if any, of tariff support. 
When the first factories were built in California the machinery was 
imported from Germany. "The Yankee inventive genius of ma- 
chinery men at once took hold of the matter, making so valuable 
improvements that both the above mentioned factories (at Watson- 
ville and at Chino) were shortly refitted with machines of American 
make, and every factory in this country in the last few years has 
purchased American machines." So in the Department of Agri- 
culture's pamphlet on the industry, it is stated that "in the early 
days of the beet-sugar industry in this country, Europe was called 
on to furnish all machinery. Now very little is imported, and in 
fact some of the foreign factories are using American-made ma- 
chinery." The domestic making of machinery, the breaking loose 
from European tutelage, the introduction of technical improve- 
ments — these are significant indications of the successful adapta- 
tion of a new industry to American conditions and of ability to meet 
foreign competition unaided. It should be borne in mind, more- 
over, that the factory managers take an active part in directing and 
supervising the agricultural operations. In this regard there seems 
to be abundant and successful enterprise. The managers of the 
beet-sugar factories have been chiefly instrumental in bringing the 
indispensable labor supply to the farms. Through traction engines 
and the like, they have grappled with the difficulties of transporting 
the beets from the field to the factory. They have selected the 
seeds, and have assiduously spread information among the farmers 
on the best ways of getting a large tonnage of beets and a large con- 
tent of sugar. In the far West especially, all this activity has been 
carried on with industrial and pecuniary success. Neither in the 
factory itself nor in the problems of organization arising from the 
interdependence of farm and factory has there been a lack of skill 
or energy. 

It is, I think, another sign of successful adaptation to new condi- 
tions that the American beet-sugar factory carries its operation a 
stage farther than do the factories of Europe. The latter usually 
produce raw sugar only, which is sent to the refineries for the last 
stage of preparation; precisely as our cane sugar is imported in the 
"raw" form, and goes through the refineries before being marketed 
for consumption. The American beet-sugar factories, on the other 
hand, make refined (granulated) sugar, which is sold at once to the 
grocers. In Europe the greater geographical concentration of 
beet growing and sugar making, and the consequent ease of trans- 
portation to refineries near by, probably account for the practice 



74 SUGAR AT A SECOND GLANCE. 

there prevailing. The different American practice doubtless took 
its start because refining was controlled, during the earlier years of 
beet sugar, by the Sugar Trust and its affiliated concerns; but it 
has persisted because it fits the geographical and industrial condi- 
tions of the industry. Another reason is that in Continental Europe 
beet farming and sugar making constitute commonly one integrated 
enterprise, and are associated either with estate farming on a large 
scale or with direct cooperation between large-scale agriculturists 
and the factory owners. A different sort of cooperation between 
farm and factory was necessary under our conditions of land owner- 
ship, and this has been worked out successfully by the American 
manufacturers. Neither in the technical aspects of the manufac- 
turing industry, nor in its appropriate organization, is there indica- 
tion of any disadvantages in the United States. 

On the agricultural side — to turn again to this, the real seat of 
difficulty — it is constantly said that sugar-beet growing has many 
and varied advantages. The high cultivation, it is said, improves 
the quality of the land; the general fertility of the land is enhanced; 
a better rotation is established; the by-products, especially the beet 
cake, are valuable for cattle feeding, and this in turn provides manure 
and maintains fertility; the factory makes a market for local coal 
and lime; it " stimulates banking and almost all kinds of mercantile 
business." These advantages have been dwelt on almost ad nauseam 
in the publications of the Department of Agriculture. So far as the 
tariff question is concerned, they prove too much. If beet culture 
is so very advantageous for the farmer, why does he need a bonus or 
protective tariff to be induced to engage in it ? The American farmer 
is not an ignorant or stolid person; he has access to a multitude of 
educational and propagandist agencies, and is even beset by them; 
he is a shrewd observer, a ready innovator. The agricultural methods 
of the central region have been revolutionized during the past gen- 
eration, with the transition from pioneer farming to conserving agri- 
culture. If beet culture were really so advantageous a part of the 
general change, we might expect its speedy and widespread adoption. 
I suspect the advocates of beet growing have been making the same 
mistake as those English travelers who in the early part of the nine- 
teenth century damned American agriculture as hopelessly inefficient. 
They suppose that the highest cultivation is necessarily the best 
cultivation. The agricultural expert is apt to be intent on the gross 
product, to search for the largest yield per acre. But the best agri- 
culture is that which secures the largest yield, not per unit of area 
but per unit of labor. Minute cultivation means a large product per 
acre, but by no means necessarily a large product per man. 

None the less, it may be argued, with show of reason, that the 
introduction of methods of cultivation so radically novel as those of 
beet growing may be prevented from taking place even though in 
reality profitable. The young industries argument may be advanced. 
Ignorance, settled habits and prejudices, unaccustomed methods, the 
inevitable failures in first trials, all these obstacles, it is said, stood 
in the way of the beet-sugar industry in its first stages. Some sort 
of premium was necessary to give it a fair start. It is true that the 
argument for protection to young industries has not been supposed 
to apply to agriculture by List and his followers, since unalterable 
conditions of soil and climate are thought to determine once for all 



SUGAR AT A SECOND GLANCE. 75 

the geographical distribution of the extractive industries. But it 
would be hazardous to lay down an unqualified proposition of this 
sort. It is not impossible that the course of industry may be guided 
and diverted to advantage in agriculture as well as in manufactures. 
The difference between the two cases would seem to be simply one 
of probability, of degree. It can doubtless be said that industry is 
more likely to pursue its " natural" course in the one case than in 
the other, since agriculture rests mainly on physical adaptation, 
while in manufactures much depends on acquired skill. In the con- 
temporary German controversy the young industries aigument has 
been advanced in support of the existing grain duties of that country. 
It may be argued that, in the far West at least, beet-sugar making 
has proved its economic advantage. It certainly has passed the 
experimental stage, and it seems to have reached the stage where 
protection is no longer needed. 

In general the aigument for nurturing protection remains of doubt- 
ful validity for agricultural products. In Germany, as in this coun- 
try, education, experiment stations, diffusion of information adapted 
to the industrial conditions are more promising means of promoting 
agriculture than tariff protection. There is quite as much weight 
in the counter argument that low prices and the need of facing a 
difficult situation are effective spurs to agricultural improvement — 
more effective than high prices and easy gains. The low prices of 
raw sugar which prevailed for a long period proved a blessing in dis- 
guise to our Louisiana sugar growers; their methods of cultivation 
and manufacture were immensely advanced in the effort to meet new 
conditions. It is difficult to give a conclusive or unqualified answer 
on the questions raised by the young industries argument; the whole 
problem of the causes of industrial progress is involved. Yet it 
remains true that acquired skill and established advantage count 
much more in manufactures than in agriculture, and that tariff pro- 
tection is a very dubious device for spurring improvement in the use 
of the soil. 

All this, however, has little bearing on the beet-sugar situation as 
it now stands. If protection to young industries was needed, it has 
been given. The initial stages of trial and unfamiliarity are cer- 
tainly passed. The industry in the far West ha,s quite passed the 
infant stage. Its difficulties in the farming region proper seem to be 
due to the competition of the other kinds of agriculture which, under 
the typical American conditions, are more profitable. If this kind 
of agriculture needs protection and if the familiar grain growing, 
cattle fattening, and dairying of the corn-wheat belt do not, the 
explanation is still to be found in the principle of comparative cost. 



TESTIMONY OF FRANK C LOWRY BEFORE THE WAYS 
AND MEANS COMMITTEE, JANUARY, 1913. 

The Chairman. All right. Mr. Lowry, you will proceed. 

Mr. Lowry. Mr. Chairman and gentlemen of the committee, I 
represent the Federal Sugar Refining Co., of New York, and the com- 
mittee of wholesale grocers, formed about four years ago to assist in 
obtaining cheaper sugar for consumers through the reduction of duties 
on raw and refined sugars. 

I fully appreciate tnat so far as the tariff on sugar is concerned 
little can be added to the information which is already a matter of 
public record and at the disposal of the committee. Consequently, 
anything that is said at these hearings must necessarily be in the 
way of repetition. 

I would first like to call the committee's attention to the fact that 
the United States is not dependent for its supply of sugar upon 
"foreign countries," in the general acceptance of this term. The 
consumption of sugar in the United States for 1912, according to 
Messrs. Willett & Gray, was 3,504,182 long tons. The estimates for 
the following crops of 1912-13 are: 

Long tons. 

Cuba 2, 328, 000 

Louisiana (1912 ) 160, 000 

Texas 10, 000 

Porto Rico 340, 000 

Hawaiian Islands 500, 009 

Philippine Islands 200, 000 

Domestic beet 625, 000 

Total 4, 163, 000 

By this it will be seen that the production of sugar inside our tariff 
wall more than equals consumption. All of these producers have 
the advantage of the full height of our tariT wall with the exception 
of Cuba, which is inside this wall to the extent of the 20 per cent 
reduction as a result of the reciprocity treaty of 1903. This island, 
adjacent to our shores, with interests so closely allied to those of the 
United States, has been favorably equipped by nature for the econom- 
ical production of sugar and is able and willing to supply the United 
States with this sugar at a low cost if it were not for the high tariiT, 
which enhances the price. The testimony before this and the Hard- 
wick committee has clearly shown that the domestic producer's price 
is always based on the in-bond value of foreign sugars plus the duty 
and cost of refining. In addition to these charges the beet-sugar 
factories add the freight from New York or San Francisco to dis- 
tributing market as well. In the sale of the domestic producer's 
product the cost of production has no relation to the selling price. 
We have a clear example of this in the price of sugar in our Western 

77 



78 SUGAE AT A SECOND GLANCE. 

States. Take January 6 as an example, and we find the following 
quotations made by the cane refiners and beet factories : 

New York City: Cents. 

Cane 4. 65-4. 70 

Colorado beet 4. 60 

San Francisco: 

Cane 5. 20 

Beet 5. 00 

Denver, Colo.: 

Cane 5. 50 

Beet 5.20 

Chicago: 

Cane (N. Y. and San Fran, refined) 4. 885 

Beet 4. 735 

At this point I would call your attention to the manner in which 
the New York price for refined sugar is arrived at. 

Cents. 
Raw sugars now being received from Cuba cost refiners, basis 96° test, cost and 

freight, not less than 2. 375 

Insurance, one-half per cent, or 012 

Duty 1. 348 

Refiners' first cost, duty paid 3. 74 

Deducting the usual discount of 2 per cent from their price of 4.65 cents on 
refined, this leaves a margin to cover the cost of refining, packing, and market- 
ing of the difference between 4.6 cents and 3.74 cents, or 82 

The average margin for 7 years is 859 

After these deductions have been made anything that is left is 
profit. 

This calculation indicates that the price to the American consumer 
is being affected only to the extent of the tariff charged on Cuban 
sugars, and while this is true at the present time, when there is great 
pressure to sell in Cuba, it is not always the case, and during October, 
November, and part of December, 1912, sugar paying the Cuban rate 
of duty, free sugar, and sugar paying the full rate of duty was being 
sold at the same duty paid equivalent. During this period the price 
to the consumer was affected to the full height of our tariff wall. I 
cover this point more fully in my brief under the heading "The 
effect of our tariff wall and Cuban reciprocity." 

That I think shows you that the domestic producer bases his price 
on the New York price plus freight to interior markets, and the New 
York price is based on the foreign price plus the duty. 

The trade will not pay the same price for beet sugar as for cane 
sugar, which accounts for the differential. 

Notwithstanding the fact that all the sugar used in our Western 
States is of domestic production, either being Hawaiian cane or 
domestic beet, and pays no duty, the price is always higher than in 
the East, where the sugar imported pays a high duty. As a result 
of the tariff the consumers in these Western States are receiving no 
benefit whatever from the fact that in their immediate locality 
refined sugar is being produced at a cost of around 3 cents a pound, 
the price only recedes as we approach the eastern coast, where the 
domestic producers come into competition with the refiners using 
imported sugar. The lowest price for sugar in the United States is 
in New York. 

Let us now see how the price for sugar to the American consumer 
is affected by the duty. Taking the figures of the Department of 
Commerce and Labor, Bureau of Statistics, No. 240, page 517, we find 



SUGAR AT A SECOND GLANCE. 



79 



the average cost per pound, free on board in foreign countries, of the 
raw sugar imported from 1905 to 1911, inclusive, was 2.378 cents per 
pound. To this we must add the freight to get the cost laid down at 
"United States ports, say, 0.14 cent, making the in-bond price of sugar 
at United States ports 2.518 cents. During these seven years the mar- 
gin between the price paid by refiners for their raw material and 
their selling price on refined has been 0.859 cent per pound. Had 
refiners not been required to pay any duty on this sugar, and this 
margin were added to the in-bond price of the raw material, it would 
have made the average selling price for these seven years 3.377 cents 
per pound. Messrs. Willett & Gray show that the average refiner's 
price, free on board New York, for these years was 4.98 cents per 
pound, showing clearly that, as a result of the tariff, the price was 
increased to the extent of 1.603 cents per pound. We can therefore 
take this figure as a fair indication of the indirect bounty that has 
been paid to the domestic sugar industry during these years. To 
give you an idea of what this amounted to, I would call your atten- 
tion to the fact that, based on the consumption, during this period 
the American people have been required to pay $776,867,000 more 
for their sugar than they would have paid under free sugar. For 
this period the total value of the domestic beet and Louisiana cane 
sugar produced was less than $500,000,000. 

During these seven years the Government collected in revenue 
from sugar the following amounts: 





Revenue. 


Consumption. 


1905 '. 


$51,171,283 
52, 440, 228 
60. 135, 181 
49. 984, 995 
56,213,472 
52, 810, 995 
52, 496, 559 


Long tons. 
2,632,216 


1906 


2,864.013 


1907 


2,993.979 


1908 


3, 185. 789 


1909 


3, 257, 660 


1910 




1911 


3,351,388 





It has been said that the tariff on sugar is a revenue measure, but 
strictly speaking this is not a fact. The Government now receives 
revenue from only about 50 per cent of the sugar that we consume. 
If we are to tax sugar for the purpose of producing revenue then we 
should adopt the method employed by all of the principal countries 
of Europe, and require all the sugar consumed to share in producing 
this revenue. This has been done by the application of what is 
known as a " consumption tax," which is paid on all sugars, whether 
of foreign or domestic origin. Under this method our refiners of 
both beet and cane sugar would be required to pay a tax of so much 
per hundred pounds on the amount of sugar they produced, but 
there need be no taxes on raw sugars made in our insular possessions — 
Porto Rico, Hawaii, and the Philippines — or in Louisiana, as the tax 
on these sugars would be paid by refiners before they were put on the 
market. It would be necessary, however, to have a provision in the 
law that any refined sugar they might make or any raw sugar im- 
ported from any source for direct consumption would have to pay 
the " consumption tax" before the sugar could be sold to the trade. 
In this way, by taxing all sugar consumed, say 25 cents a hundred, 
the same amount of revenue can be raised for the Government as 



80 SUGAR AT A SECOND GLANCE. 

would be derived under an import rate of 50 cents a hundred on half 
the sugar consumed. It has the added advantage of only advancing 
the price to the consumer 25 cents a hundred instead of 50 cents, and 
increases as consumption increases. You will note that under the 
present arrangement the Government derived little more revenue 
from sugar in 1911 than in 1906, althought consumption increased 17 
per cent. I believe this demonstrates that from a purely revenue 
standpoint the present method of collecting revenue from sugar 
is faulty. 

The beneficiaries of our high tariff on sugar are loud in their clamor 
that the present rate should be maintained for the purpose of revenue; 
in the next breath they make the claim that it will not be long before 
all the sugar which we consume will be of domestic origin, and over- 
look the fact that in this event the Government will receive no rev- 
enue at all from the tariff on imported sugar; so it is clear that they 
are not so much concerned about Uncle Sam's pocketbook as they 
are about their own. 

Let us consider the domestic sugar producer's position. It is not 
my understanding that the people of the United States desire to be 
heavily taxed so that the sugar producers in Porto Rico, Hawaii, or the 
Philippines can make excessive profits. 

If protection to infant industries were needed, it has been given. 
Porto Rico and Hawaii have practically reached their maximum 
production, all available cane lands now being under cultivation, so 
that little further progress can be made, with the possible exception 
of improvements in yields and efficiency in the mills. Both of these 
islands have in the past worked successfully under conditions of 
absolutely free trade. Hawaii boasts, and with reason, that the 
industry is run under more scientific conditions than any other 
sugar industry in the world. It was currently reported that the 
Hawaiian crop of 1911 was sold for about $52,000,000, with the 
planters' profits $20,000,000. I have not been able to ascertain 
what the profits were in 1912, but under date of November 21, 1912, 
the Kekahala mill declared a dividend of 87 \ per cent. 

I do not believe that the American people should be heavily taxed 
so as to produce these results. 

Let us now consider Louisiana's position. This " infant industry" 
is over 100 years old and has always been directly or indirectly sub- 
sidized. In 1894-95 it produced 316,000 long tons; in 1911, 315,000 
long tons, and the average for the last seven years is 316,500 tons. 

Louisiana has in the past contended that it cost them on the 
average 3f cents per pound to produce raw sugar. In this state- 
ment they present the strongest possible indictment that can be 
drawn against their industry, as they clearly show that with Cuba, 
Porto Rico, and Hawaii producing the same grade of raw sugar at 
around 2 cents a pound, the Louisiana industry is a highly artificial 
one. 

I do not, however, think this cost should be taken seriously, as it 
appears the cost in good, bad, and indifferent factories was taken 
and averaged, without taking any standard as a basis for arriving at 
a proper cost, and their view seems to be the same as that taken by 
the beet-sugar factories, namely, that the higher they can make their 
cost appear, the higher you must make the tariff bounty. I believe 
that closer investigation will show that the most slipshod methods 



SUGAR AT A SECOND GLANCE. 81 

are employed in many of the Louisiana mills, and consequently any 
returns made from them should be ignored. 

However, it is clear that this heavy indirect subsidy granted to the 
Louisiana industry by the United States Government has not tended 
to produce the best results. Messrs. Willett & Gray are the authority 
for the statement that there are now 210 mills in the State of Louisi- 
ana, of which 32 are the old open-kettle style of factory. So we 
find Louisiana, with 210 factories, producing 316,000 long tons of 
sugar, as compared with Cuba, with 174 mills, producing 2,328,000 
long tons, and Porto Rico, with about 43 mills, producing 340,000 
long tons. 

These figures make it clear that, aside from all other reasons, the 
cost of producing sugar in Louisiana must necessarily be very high. 
But the happy-go-lucky methods of the Louisiana planter have not 
been the only or even the most serious handicap with which the 
industry has had to contend. Nature herself rebels against any 
attempt to grow cane sugar, a tropical plant in a temperate climate. 
The constant fear of frost requires the cutting of the cane in October 
before it is properly matured, and the result is that the cane yields 
only from 6 to 7 per cent, as compared with 10 to 11 per cent in 
Cuba, with an occasional yield of 14 per cent, and 14 to 15 per cent in 
Hawaii. 

After 100 years' work, Louisiana, under unnatural conditions, but 
with a heavy subsidy as an offset, managed to produce 316,000 long 
tons, while Cuba, under natural conditions and without subsidy, 
increases its crop in one year over 425,000 long tons. If a clear 
example were needed of the fallacy of attempting to foster an industry 
under unnatural conditions we have it in Louisiana. One constantly 
hears that the sugar industry is a detriment to the State, and if the 
people would only give it up and devote themselves to the cultivation 
of other crops for which nature has especialty favorably endowed 
them, all would be on a much better footing. 

The industry has had its chance. Those engaged in it have had 
practically everything they wanted in the way of Government help, 
and they have no further claim on the American people if to-day 
they find themselves unable to meet their competitors who are pro- 
ducing raw sugar under natural conditions at a cost of around 2 cents 
per pound and refined beet sugar at a cost of around 3 cents per 
pound. 

I do not understand it to be the wish of the American people that 
an illegitimate industry be subsidized through the tariff. 

The tariff in its relation to the beet-sugar industry is not nearly so 
complicated as the beneficiaries of the present tariff try to make it 
appear. 

The industry is divided into two parts, agricultural and manufac- 
turing. The beet-sugar factories themselves recognize that the 
farmer who grows sugar beets does not require a high protective tariff 
and they pay no more, and, if anything, less, for sugar beets than is 
paid by the factories of Germany, where the protective tariff rate is 
only 52 cents per hundred on refined and 47 cents on raw, as com- 
pared with our rate of $1.90 on refined, $1,685 on full-duty-paying 
raw sugars, and $1,348 on Cubas. 

S. Doc. 23, 63-1 6 



82 SUGAR AT A SECOND GLANCE. 

They have presented ample evidence tending to show that the 
farmer is well satisfied with his present position; so that all 
the testimony that the representatives of the beet-sugar factories 
give to siiow how the farming industry will suffer if the tariff 
is reduced is put forth with a view of diverting your attention. 
You will hear a great deal about the farmers' indirect benefits,. and 
you will note in their arguments the beet-sugar factories conveniently 
appropriate for themselves all the benefits to the farmer which come 
from " intensive" instead of " extensive" cultivation of the soil. 
They will compare the cereal and grain yields of the United States 
with crops of Continental Europe and claim that the high figures of 
the latter are due entirely to the cultivation of the sugar beet. They 
will avoid telling you that in England, where sugar beets are not 
grown, the yields of these other crops compares favorably with 
continental yields, as this would prove conclusively that it was the 
manner of farming, and not the sugar beets that was responsible for 
these results. Taking the other side of the question, we find that 
sugar-beet yields in the United States are nearly the same (some 
localities exceed) as in Germany, so that in this particular we are 
closer to the foreign yield than we are on cereals and grains. This 
would, of course, mean that less protection was needed by the farmer 
on sugar beets than on these other crops. All this, however, is aside 
from the issue; i. e., as the farmer now receives no benefit from our 
high tariff on sugar, he therefore should not be handicapped by its 
removal. I would also mention that even the stand-pat element of 
the Republican Party recognized that from an agricultural point of 
view no protection is necessary, as sugar-beet seed is admitted free 
of duty, and sugar beets (which are the product of the farm) pay only 
a nominal rate of 10 per cent. This, on the beets imported, is equiv- 
alent to 0.14 cent per pound of sugar, based on the sugar content. 

Having found that the agricultural phase of this business does not 
benefit from the present high tariff, let us now consider the beet- 
sugar factory's position. 

I have never heard the contention made that a well-equipped beet- 
sugar factory in the United States could not operate as cheaply as 
anywhere else in the world. The cost of labor does not enter to any 
extent into the factory's cost of operation. One frequently hears the 
claim that beet sugar must be very pure, because it is not touched by 
a single human hand from the time the beets enter at one side of the 
factory until refined sugar is ready for delivery at the. other side. 
So it is clear that the cost of labor does not play an important part 
in their process of manufacture. You will find hi all their statements 
that the beet-sugar men confine their comparisons to statements 
along the following line: "We must have a high tariff because we 
pay our watchman $2 a day and in Germany he receives only 50 cents." 
This is immaterial; it is the labor cost per pound of sugar produced 
that counts. This does not exceed 0.14 cent per pound. 

Fuel is an important item, and this, of course, is cheaper in the 
United States than abroad, particularly in our Western States where 
oil is used. It is a well-recognized fact in the manufacturing business 
that the larger the production in a factory the lower the cost per unit, 
and the factories in the United States average considerably larger 
than those abroad. 



SUGAE AT A SECOND GLANCE. 83 

The investigations of the Hardwick committee proved what every- 
one in the sugar business knew — that the tariff on sugar has in the 
East served the purpose of enabling those engaged in the domestic 
eet-sugar industry to overcapitalize their plants and to pay excessive 
dividends on watered stock. As an indication of how these interests 
have capitalized the tariff, I would call your attention to the fact 
that the combined capitalization of the beet-sugar plants in the 
United States is now $141,000,000, and these plants, working three 
months in the year, produce 625,000 long tons of sugar, while cane- 
sugar refiners, with approximately $110,000,000 invested in refining, 
working 12 months in the year, produce 2,900,000 long tons. 

In closing I would like to call your attention to the fact that even 
the stand-pat element in the Republican Party has admitted that the 
present tariff on sugar is indefensible. So all are agreed that some 
reduction must be made, and the question to be decided is how 
much, if any, of the present tariff should be retained ? 

If you find it impossible to place sugar on the free list, I urge you to 
consider as a maximum rate the rate I recommended to the Finance 
Committee — 62 cents per 100 pounds on refined sugar and 60 cents on 
raw sugar testing 96°, with the assessed differential per degree of 
0.006 cent per pound. Importations from Cuba would, under our 
reciprocity treaty, pay 20 per cent less than these rates, and as a 
result of this rate the price of refined sugar to the consumer would 
probably be advanced by the duty about 53 cents per 100 pounds 
mstead of $1.60 as at present. 

Be assured that any sugar industry that can not work profitably 
with a protection of a half a cent a pound (this being 20 per cent to 25 
per cent of the cost of production under natural conditions) is artificial 
in the extreme. 

Sugar is a large business and the margin of profit should be small 
in it and depending upon volume of business to carry you through. 

Mr. Harrison. This is the protective rate suggested by you? 

Mr. Lowry. Yes. 

Mr. Harrison. You do not refer to the present rate ? 

Mr. Lowry. No; I am comparing the present "pork-barrel" pro- 
tective tariff with a scientific protective tariff. This rate I suggest 
is a trifle higher than the rate which the countries of Europe have 
arrived at as a proper protective rate. This is purely from a pro- 
tective standpoint, you understand. 

I would call your attention to the fact that this protective rate is a 
trifle higher than that which the leading countries of Europe (where 
beet sugar is produced so extensively) have decided is a proper pro- 
tective tariff. The rate of 0.47 cent on raw and 0.52 cent on refined 
was agreed upon at the convention of a number of countries in Europe 
known as the Brussels convention, and was adopted by Austria, 
Belgium, France, and Germany as a maximum protective rate to be 
charged. This is, perhaps, the nearest approach we have to a scien- 
tific conclusion as to what is a proper protective tariff for the beet- 
sugar industry. No evidence has been presented to show that on a 
protective basis this rate could not be adopted by the United States 
to advantage. I would also call your attention to the fact that, 
based on the in-bond price of sugar for the past 7 years of 2.518 cents 
per pound, this tariff would be equivalent to an ad valorem rate 
of about 21 per cent and would produce $19,330,000 in annual 



84 SUGAR AT A SECOND GLANCE. 

revenue would subsidize the domestic sugar industry to a like 
amount — $19,330,000 — and would result in a yearly saving on our 
present consumption of $83,988,234 to the American consumers. 

It seems to me that in producing this much revenue a necessity 
of life-like sugar is doing its full share, but if you should decide that 
.sugar must produce more revenue, then I urge you to adopt in 
addition the consumption tax, which is strictly a revenue measure. 

Mr. Shackleford. As a revenue tax it would be paid by the 
consumer ? 

Mr. Lowry. Oh, yes; just as the tariff tax is now paid by the con- 
sumer. You can not get revenue without having it paid by the 
consumer, I believe. The difference is if you tax all the sugars 25 
cents a hundred pounds you get the same amount of revenue that 
you would by taxing half the sugar consumed, or that which, is 
imported, at the rate of 50 cents a hundred pounds. The former 
method has the advantage of increasing the price to the consumer 
only a quarter of a cent a pound, while the latter increases the price 
a half a cent a pound. 

Mr. Shackleford. Is it an example that might become contagious ? 

Mr. Lowry. In what way ? 

Mr. Shackleford. As a means of taxing other domestic products. 

Mr. Lowry. If it reduced the price it might be an advantage to do 
that. I do not know whether it would become contagious or not. 

Mr. Payne. That chance for contagion has had about 100 years to 
work, has it not ? 

Mr. Lowry. What did you say ? 

Mr. Payne. That chance for contagion with other products has 
had about 100 years to work, has it not ? 

Mr. Lowry. As I do not believe it to be the sentiment of our 
people that American industries should be compelled to compete 
w T ith bounty-fed products of other nations, I would suggest that 
whether or not sugar be placed on the free list, a count ervailing-duty 
clause be enacted similar to that found in the tariff law of 1909, 
section 6, page 84. 

Gentlemen, the United States, because of its proximity to Cuba 
and its insular possessions, Porto Rico, Hawaii, and the Philippines, 
as well as from the fact that beet sugar can be produced in our 
Western States at a very low cost, should have cheaper sugar than 
any nation in the world. From these sources, with their natural 
advantages, we are assured not only of an ample supply of sugar 
but that this supply could be obtained at a minimum cost if it were 
not for the high duty which enhances the price. 

No other nation in the world is so favorably situated; and the 
question is, Are the people to receive the benefit of our natural 
advantages or are they to be exploited for the benefit of the pro- 
moters of our domestic beet and cane sugar industry? The present 
high tariff means the latter. 

In amplification of this I desire to file the attached statements, 
one under the caption of "Our high tariff on sugar from the con- 
sumers' standpoint," and the other a "protest," which directly refers 
to the majority report of the Senate Finance Committee. 

There has been some question raised by the domestic sugar in- 
dustry as to a reduction in the tariff going to the consumer of articles 
wherein sugar was used in manufacture. Condensed milk was one 



STJGAK AT A SECOND GLANCE. 85 

of the points which they raised, and I made some inquiries on that 
question. It did not seem to me possible if you reduced the manu- 
facturers' first cost that competition would not take care of a reduc- 
tion in the sale price of his finished product. So, as I started out to 
say, I made some inquiries of condensed-milk manufacturers, and 
the conclusion is — well, I will read this : 

Philadelphia, November 21, 1912. 
Mr. F. C. Lowry, 

Secretary and Treasurer, No. 138 Front Street, New York City. 
Dear Sir: Replying to yours of November 26, we beg to advise that approximately 
17 pounds of refined sugar enters into the manufacture of an average case of con- 
densed milk. This, figured at If cents a pound, increases the cost of condensed 
milk per case by 27| cents. There are 48 cans to a case, and the cost to the manu- 
facturer is therefore increased by more than one-half cent per can. This one-half 
cent could be saved to consumers were the sugar duty abolished. 
Yours, very truly, 

Hires Condensed Milk Co., 
H. C. Hooks, Secretary. 

This one-half cent per can could be saved to the consumer in the 
case of the condensed milk. 

I also made some inquiries of candy manufacturers and found 
those who handled bulk candies were in favor of free sugar or a 
material reduction in the present rate of duty, while those who 
handled package goods were not so keen for it. I did not understand 
that at first, and finally when I put it up to them they said: 

Well, our industry is at present standardized. We have certain sizes of packages 
all through the industry, we will say, to sell for 5 cents or 10 cents or some other sum. 
If you reduce the price of sugar we will have to give a larger package for 5 cents or 
give a present 5-cent package for less money. That would mean a reorganization of 
our business and a lot of trouble. 

From this you will readily see that the consumer would get the 
benefit from a reduction in duty. 

Now, gentlemen of the committee, I believe what I have said 
pretty well covers the situation, taken together with the papers I 
nave handed the reporter. If you would like me to review the 
matter further I can do so, or if you wish to ask any questions I will 
be glad to answer them. 

Mr. Fordney. Mr. Chairman, I would like to ask the gentleman 
a few questions. 

The Chairman. All right, Mr. Fordney, you may proceed. 

Mr. Fordney. Mr. Lowry, you have stated that the list prices for 
sugar in this country is based upon the rates for sugar in New York? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. Was this true during 1911 ? 

Mr. Lowry. In the main, it was. There might have been a par- 
ticular period when it was not, but — yes; I guess it was. 

Mr. Fordney. There was a very particular period. Is this not 
true, that an abundance of testimony was furnished before the* 
special committee on the investigation of the American Sugar Refin- 
ing Co., known as the Hardwick committee, that after domestic sugar* 
was off the market in June the refiners in New York put up the price? 
of sugar to as high as 7.5 cents per pound, and that continued during' 
July, August, and September ? 

Mr. Lowry. There was ample testimony to show 

Mr. Fordney (interposing). Is it not true whether there was tes- 
timony to that effect or not ? 



86 SUGAR AT A SECOND GLANCE. 

Mr. Lowry. Domestic sugars, in the first place, came on the mar- 
ket in the latter part of August of that year. 

Mr. Fordnet. No; wait a minute and answer the question I pro- 
pounded. Let us see if we can not get at this right. Is it not true 
that the price of sugar in New York advanced during July, August, 
and September to as high as $7.50 per 100 pounds? 

Mr. Lowry. Yes; for a short period, it is. 

Mr. Fordney. Oh, for a short period, you say. Was it not for 
three or four months ? 

Mr. Lowry. No; it started to advance on the 5th day of July from 
5 cents. 

Mr. Fordney. Mr. Lowry, is not this true, that in October, when 
domestic beet sugar came on the market, your company — the Federal 
Sugar Refining Co. — dropped its price from about 7 J cents per pound 
to 5.75 cents per pound when the beet sugar was put on the market 
at 5.55 cents? 

Mr. Lowry. No; beet sugar was put on the market the latter part 
of August, coming on from California. California beet sugar was 
sold very late in August that year. 

Mr. Fordney. There is no beet sugar made 

Mr. Lowry (interposing). Of course, Mr. Fordney, if you just pick 
out particular dates 

Mr. Fordney (interposing). There was no beet sugar made in 
August and put on the market in the Eastern States ? 

Mr. Lowry. There was in California. 

Mr. Fordney. I mean in New York. 

Mr. Lowry. California produces a great deal more sugar than they 
use there and it is shipped east. 

Mr. Fordney. Mr. Chairman, I appeal to you that the gentleman 
is avoiding answers to my questions and making an argument. He 
has already had full time in which to make his argument, and I want 
him to answer my questions now, if he will. 

The Chairman. Mr. Lowry, you will please answer Mr. Fordney's 
questions. You have the privilege of answering the questions in 
your own way, but please try to answer his questions. 

Mr. Lowry. I will. 

Mr. Fordney. Is it not true that after domestic beet sugar was 
off the market in 1911 the refiners of sugar advanced the price as 
high as $7.50 per 100 pounds in New York? 

Mr. Lowry. No; the big advance began in July and culminated in 
September and October, when the new crop of sugar in Europe came 
on the market. They advanced refined sugar as raw sugar advanced, 
as the world's values advanced. 

Mr. Fordney. Well, I will get to that in just a minute. I want to 
know about this now. 

Mr. Lowry. All right. 

Mr. Fordney. Is it not true that when beet sugar came on the 
market your price dropped abnormally, I mean the price at which 
your company sold sugars for in the New York market ? 

Mr. Lowry. Beet sugars were on the market during the whole 
period. 

Mr. Fordney. No; they were not. I beg to differ with you. 



SUGAR AT A SECOND GLANCE. 87 

Mr. Lowry. Suppose I quote some prices or put them in the record ? 
We have had some correspondence on the subject, and this paper 
covers the thing clearly, and I will just put in the whole record: 

Committee of Wholesale Grocers, 

New York, January 18, 1912. 

Dear Sir: Knowing that you are interested in the tariff on sugar, I would like to 
give you an idea of the extremes to which the domestic industry will go in order to 
have the Government maintain the present high tariff rate, which grants such a heavy 
subsidy to this industry. 

Mr. Frederick R. Hathaway, of the Michigan Beet Sugar Co., prepared an affidavit, 
which the Hon. J. W. Fordney, Congressman from Michigan, and member of the Hard- 
wick investigating committee, filed with the committee on December 6. Mr. Hatha- 
way's affidavit shows the price quoted by the various New York refiners from Septem- 
ber 1 to November 20, ranging from 6.25 cents to 7.50 cents. The price quoted by the 
Michigan Sugar Co. on the same dates is not given. He goes on to state that the 
"Michigan Beet Sugar Co. began delivery of this season's sugar on October 12, 1911; 
that up to and including November 18, 1911, it had invoiced 860 cars of sugar," and 
concludes with the following statement: "Deponent further states that of the total 
amount of sugar invoiced by the Michigan Beet Sugar Co., as above stated, from Octo- 
ber 12 to November 18, A. D. 1911, 94.1 per cent was invoiced on the basis of $5.55 per 
hundred pounds, or 5.55 cents per pound." The purpose of this affidavit is to have 
the uninitiated believe that the Michigan Sugar Co. assumed a charitable r61e this 
year and sold their sugar at a relatively lower price than that quoted by the New York 
cane-sugar refiners. In other words, that during the recent spectacular advance in 
sugar the domestic -sugar industry stepped into the breach and "saved the day" by 
selling sugar to consumers at a concession, thereby protecting them from the "extor- 
tion" of the New York refiners. 

The attitude assumed by them is perhaps best shown in the testimony of the writer 
before the Hardwick committee last December when being questioned by Mr. J. W. 
Fordney, of Michigan, the champion in the House of Representatives of the beet-sugar 
industry (p. 3362): 

Mr. Fordney. What justified you — your firm — in selling September sugar at 7.25 
cents per pound, when the domestic industry shortly afterwards, as soon as their sugar 
began to go on the market, sold for 5.55? What caused you to come down on the 
price? 

Mr. Lowry. They sold for what? 

Mr. Fordney. 5.55. 

Mr. Lowry. Do you not know that the domestic industry was at that time quoting 
6.50 cents a pound? 

Mr. Fordney. No. 

Mr. Lowry. I know that it was. 

Mr. Fordney. I put an affidavit in the record on that. 

Mr. Lowry. Well. * * * 

Mr. Fordney. They had no sugar in the market in September. They had none 
until their season opened, on October 12, and they began selling at 5.55 f. o. b. factory. 

Mr. Lowry. And when did they begin selling at 5.55? 

Mr. Fordney. As soon as the season opened. 

Mr. Lowry. Not at all. They began when cane sugars were selling at 5.65. 

Mr. Fordney. I beg your pardon. I looked up the records themselves, the bill 
books and the invoices, and on October 12, when the season opened, they quoted BUgar 
at 5.55 and sold it at that, and continued to sell. They sold 809 carloads out of about 
850 carloads at that price, 5.55, while your firm was selling at 7.25. 

After further testimony on other matters, the question of the selling prices of beet 
and cane sugar was reverted to by Mr. Fordney, and the following testimony ensued 
(p. 3381): 

Mr. Fordney. And all this time Michigan sugar was sold by the Michigan Sugar Co. 
and all other factories in that State at 5.55. 

Mr. Lowry. Is not that because they used bad judgment? 

Mr. Fordney. Well, they may be a pack of fools, but they are generally intelligent 
enough there in New York. 

Mr. Lowry. They sold out at that price because they thought it was a good figure; 
and I will tell you that they were blamed sorry when the market got up to 6.50 that 
they had sold out. 

Mr. Fordney. No; it was when sugar was at 6.50 that they were selling it at that. 

Mr. Lowry. No; you are wrong on that. 

Mr. Fordney. How do you know I am wrong on that? I saw their books. 



88 SUGAK AT A SECOND GLANCE. 

Mr. Lowry. My business, Mr. Fordney, is to sell sugar, and I keep pretty good track 
of what is going on. 

Mr. Fordney. But you- do not know anything about what the Michigan man's mind 
is, and what his contracts are, or anything about it. 

Mr. Lowry. The Michigan man is the same as a man anywhere; he wants to get the 
highest price he can. He sells his sugar at the highest price he can get for it, and he 
sells it when he thinks the market is right, and if he has misjudged the market he is 
very sorry. 

The idea, of course, is to assume the air of virtue from the fact that the Michigan 
Sugar Co. misjudged the market, thereby deceiving our legislators into believing that 
the Michigan Sugar Co. really did something to prevent the public from paying too 
much for their sugar during the recent rise. 

To prove my statements, I refer to the following: 

Under date of August 16 Messrs. Turner Bros., sugar brokers of New York City, in 
their daily market report stated: 

"New crop beet granulated can now be purchased for October shipment on the basis 
of 5.55 cents cash, less 2 per cent, for shipment to Pittsburgh and points west, and 
basis 5.65 cents cash, less 2 per cent, for shipment to Utica, N. Y., Scranton, Pa., and 
points west thereof." 

On that date eastern refiners were quoting granulated for immediate shipment as 
follows : 

American Sugar Refining Co., 5.75 cents; National Sugar Refining Co., 5.85 cents; 
Arbuckle Bros., 5.85 cents; Federal Sugar Refining Co., 5.95 cents; Warner Sugar 
Refining Co., 5.85 cents; Franklin Sugar Refining Co., 5.75 cents. 

W. H. Edgar & Son, sugar brokers of Detroit, state in their circular of August 18: 

"In the regular beet territory (Pittsburgh, Buffalo, and west) new crop Michigan 
granulated is now offered for shipment after the commencement of operations at buy- 
ers' option during October basis 5.55 cents, without guaranteed." 

A. H. Lamborn & Co., sugar brokers of New York City, in their market report under 
date of August 29, state: 

"Advices from the interior state that the domestic beet refiners have practically 
disposed of their October production, and to-day's prices have advanced to the basis 
of 6.05 cents." 

October 12, the date Mr. Fordney refers to, was a holiday in New York, but under 
date of October 13 Messrs. Turner Bros., in their market review of that date, stated: 

"New crop beet granulated is quoted to-day on the basis of 6.50 cents cash, less 2 per 
cent, to Utica and Scranton and points west thereof, carrying the same eastern basis of 
rail freight. These sugars can be purchased for shipment in turn during November." 

On that same date eastern refiners were quoting granulated for prompt shipment as 
follows: 

American Sugar Refining Co., 6.75 cents; National Sugar Refining Co., 6.75 cents; 
Arbuckle Bros., 6.75 cents; Federal Sugar Refining Co., 6.75 cents; Warner Sugar 
Refining Co., 6.75 cents; Franklin Sugar Refining Co., 6.75 cents. 

On my return to New York I wrote Congressman J. W. Fordney as follows: 

New York, December 14, 1911. 
Hon. J. W. Fordney, 

Congressman from Michigan, Washington, D. C. 
Dear Sir: When I was on the stand last Saturday you made the claim that the 
Michigan Sugar Co. had sold sugar at 5.65 cents basis, when the New York refiners 
were quoting 6.75 cents. This I denied, stating that the Michigan factories unques- 
tionably sold at 5.65 cents, but they did it when the New York refiners were selling at 
10 points higher, or 5.75 cents, which was some time in August. In other words, the 
5.65 cents price looked so good to the Michigan Sugar Co. that they anticipated the 
market in August and made contracts at this figure, for delivery as soon as possible, 
with the understanding that this would be some time in October. In this I was abso- 
lutely correct, and it is unfortunate that we did not have Mr. Hathaway's affidavit 
before us when we were arguing this point. Carefully reading Mr. Hathaway's state- 
ment, you will note that he does not make the claim that you did. He merely gives 
the price at which the sugars, delivered in fulfillment of contracts, is invoiced, making 
no mention as to the date the sales were made. The Michigan Sugar Co. having no 
philanthropic motives in mind had simply misjudged the market and sold' too soon, as 
I claimed. Of course I recognize that Mr. Hathaway's statement is misleading, both 
to you and to the public, and was intended to be so, just as his statement to the Ways 
and Means Committee in 1908 (which President Warren did not contradict), to the 
effect that the American Sugar Refining Co. had no interest in the Michigan Sugar Co. 
was intended to mislead them. In the present instance the Michigan Sugar Co. is 



SUGAR AT A SECOND GLANCE. 89 

trying to assume the air of virtue, from the fact that they misjudged the market. I 
might add that for this same reason some New York refiners in October were still deliv- 
ering sugar at 5 cents, which was sold by them before the advance. 

As your statements were very emphatic on the point, and as it is clear that the state- 
ment misled you, it seems to me that you should take occasion at the earliest oppor- 
tunity to correct the false impression that one not knowing the facts would get from 
reading the evidence. 

Respectfully, yours, Frank C. Lowry. 

P. S. — I am sending copies of this letter to other members of the committee. 

Under date of December 16, 1911, Mr. Fordney replied as follows: 

Washington, D. C, December 16, 1911. 
Mr. Frank C. Lowry, 

138 Front Street, New York, N. Y. 

My Dear Sir: Replying to yours of the 14th, would say your story, as set forth 
in your letter, is quite in keeping with what you have stated heretofore in my presence 
and incorrect. Your figures are not correct and your conclusions are not correct. 
You would evidently present any argument to mislead the public to believe that free 
trade on sugar would inure to the benefit of the consumer, when in fact it would benefit 
only those interested in refining imported raw sugar. 

The beet-sugar industry is here to stay, and I firmly believe the present rate of 
duty on imported raw sugar will not be disturbed for some time to come. Certainly 
not while the Republican Party is in power, for the Republican Party does not seem 
willing to swell the coffers of men engaged in refining raw sugar and to aid in the 
destruction of a magnificent industry, now giving aid in a most substantial manner 
to the consumers of sugar in the United States. 
I am, very truly, yours, 

J. W. Fordney. 

My answer to this letter follows under date of December 18: 

New York, December 18, 1911. 
Hon. J. W. Fordney, 

House Office Building, Washington, D. C. 

Dear Sir: I have to acknowledge your letter of December 16, and have read 
same with interest. 

I appreciate that history shows that many statesmen have taken the easiest, if not 
the most honorable, way of disposing of a displeasing statement of facts made by the 
opposition by the simple method of calling the man a liar, at the same time taking 
very good care not to attempt to prove the latter statement. If you desire to prove 
that every statement which I made to you in my letter of December 14 is correct, 
write to any broker handling Michigan beet sugars; Chicago would perhaps be the 
best market, and the largest brokers there are Meinrath Brokerage Co., F. C. Van 
Ness, Chester Hogle, Wm. F. Havemeyer & Co.; and in Detroit you can write to 
Mr. Goodlow Edgar, of Wm. H. Edgar Co. (the latter company has for many years 
worked hand in glove with the American Sugar Refining Co., receiving special rebates 
for distributing their product, etc.). 

When Mr. Hathaway is brought right to the point I do not believe that he himself 
will deny the statements which I have made regarding this affidavit of his, or will 
deny that the beet-sugar factories of Michigan this year based their selling price on 
the cane-sugar refiner's quotation, just as they have always done, and when they sold 
their sugar at 5.55 cents, 5.65, cents, and 5.75 cents, etc., the New York refiners were 
making sales at the usual difference, or 10 points higher than these figures. In fact, 
it seems to me that a careful analysis of Mr. Hathaway's affidavit shows this. He 
himself admits that they sold sugar as high as 6.4 cents, and an examination of their 
books will show that at that time they were so thoroughly sold out they had little 
or no sugar unsold for delivery prior to December 1. 

An attempt has been made to show that the Michigan Sugar Co. sold to their 
customers at 5.55 cents to 5.65 cents when the New York refiners were selling at 
6.75 cents. This is the statement which you made, and it is not correct. This 
is not a theory of mine but a statement of facts, and can be readily proved by 
you if you desire to do so. I was under the impression that your statement was the 
result of an incorrect conclusion you had drawn from Mr. Hathaway's affidavit, which 
was obviously made up with the view of concealing the real facts and with the desire 
to have their attitude improperly construed by the public, just as it was by you. 
Unless you make some effort to ascertain the facts and correct this false impression 
I am forced to the conclusion that your attitude on this important matter coincides 
with Mr. Hathaway's. 



90 SUGAR AT A SECOND GLANCE. 

In reply to your intimation that the public would not benefit by a reduction in 
the duties on raw and refined sugar, I refer to Messrs. Willett & Gray's table of refined- 
sugar prices for the year 1891, which I sent to Mr. Malby last week, and copy of which 
I inclose herewith, showing conclusively that when the tariff on sugar was removed 
the price of refined sugar to the consumer was reduced If cents per pound in one 
week. 

Naturally I am interested in your statement to the effect that the Republican 
Party will not reduce the duty on sugar while it is in power, but will continue its 
policy of failing to keep faith with its pledges to the people. The present sugar 
tariff, or half the present rate, can not be defended on the theory of protecting 
American industries to the extent of "the difference in cost of production between 
here and abroad." Such a course will unquestionably lead to the retirement of the 
Republican Party from power after March 4, 1913. 
I am, respectfully, yours, 

Frank C. Lowry. 

Receiving no reply to this letter I again wrote Congressman J. W. Fordney under 
date of January 9, as follows: 

New York, January 9, 1912. 
Hon. J. W. Fordney, 

House of Representatives, Washington, D. C. 

Dear Sir: I have had no reply to my letter to you of December 18, 1911, and am 
naturally curious to know whether or not you intend correcting in the record the 
misstatement which you have made, regarding which we have had some corre- 
spondence. 

Yours, respectfully, Frank C. Lowry. 

I am still without any reply to the above. 

To me this example clearly shows the extent to which those who profit by high pro- 
tection will go to conceal the real facts in their effort to confuse our legislators and 
the public generally. 
I give you this simply as a matter of information. 
Yours, very truly, 

Frank C. Lowry, Secretary. 



Committee of Wholesale Grocers, 

New York, March 1, 1912. 

Dear Sir: As an indication of how incorrect is the claim that the beet-sugar pro- 
ducers of the United States sell their sugars at low prices for the benefit of the American 
consumer, I would call attention to the fact that in anticipation of higher prices the 
beet-sugar producers have for several weeks withdrawn their product from the market, 
notwithstanding the fact that about 25 per cent of the beet sugar produced in this 
country during the last campaign is still unsold. 

The situation is well covered by Willett & Gray's Weekly Statistical Sugar Trade 
Journal of February 29, from which I quote as follows: 

"The beet-sugar factories are still quoting 5.9 cents, less 2 per cent, and thus prac- 
tically withdrawn from the general market." 

Prices of the New York sugar-cane refiners are to-day on the basis of 5.8 cents. 

This action of the beet-sugar factories in withdrawing their product in the hope of 
getting still higher prices is taken in face of the fact that prices are to-day a half a cent 
higher than the lowest price touched since the first of January, and fully 2\ cents 
a pound above the cost of producing beet sugar. 

Based on the beet-sugar men's figures given before the Hardwick investigating 
committee, it was shown that beet sugar could be produced at less than 3 cents a 
pound, and that the average cost was 3^ cents a pound. On the latter basis, which 
is known to be high, to-day's price would show the beet-sugar men a profit of about 
70 per cent over their cost of production. It would therefore be reasonable to expect 
that the dividends of 33J per cent paid by the Michigan Sugar Co., and 100 per cent 
paid by the Union Sugar Co. of California, last year would be bettered this year. 
This is not a criticism of methods, but simply a desire to call attention to the fact 
that these gentlemen are in business to make as much money as possible, and any 
attempt to deny the fact only proves that the man making the claim is either not 
familiar with the situation or is wilfully attempting to mislead. 
Respectfully, yours, 

F. C. Lowry, Secretary. 



SUGAR AT A SECOND GLANCE. 



91 



In Mr. Hathaway's testimony, by picking out quotations in par- 
ticular markets on certain dates last fall, he now endeavors to make 
it appear that the beet-sugar producers did not follow the usual 
custom of basing their price on the New York refiner's quotation plus 
the freight from New York to destination. I recognize that the com- 
mittee is not interested in "special prices" that are made at some 
stated time, but is interested only in what is the custom of the trade. 
And it was clearly shown in the evidence taken before the Hardwick 
committee that the custom of the domestic producer is to base his 
price on the New York refiner's quotation, delivered at various desti- 
nations throughout the interior of the country. As this includes 
freight from seaboard to destination, it is apparent that the price 
in the interior is higher than at New York. The domestic beet-sugar 
men were very anxious to dispose of their sugars rapidly this season, 
because they recognized that the higher prices obtained in the fall of 
1912 would not prevail after the 1st of January, 1913, when Cuba 
sugars would come on to the market in free supply, and for this reason 
they at times anticipated the market. Their position is well covered 
by the following market report, issued to the trade on December 6 : 

With the large Cuban crop staring them in the face, and the certain knowledge that 
as soon as this Cuban sugar becomes available, prices will recede rapidly, it is not 
surprising that the domestic beet factories are pushing the sale of their sugar, so as to 
dispose of as much as possible on to-day's market, rather than hold it until after the 
first of the year, when they will have to compete with low-priced cane sugars. Prices 
are therefore quite irregular. 

That their judgment was correct is shown by the fact that between 
January 1 and 21 the price of refined sugar in New York declined 45 
points. It will be observed that this decline was not due to any 
pressure of domestic sugar, but was due to the fact that the new 
Cuban crop was being harvested and was being received by our 
refiners at lower prices. 



Quotations for granulated sugar at New York. 
[Cents per pound not cash.) 





1911 


1910 


1909 


1908 


1907 


1906 


Average Jan. 1 to July 1 


4.720 
5.969 


5.015 
4.929 


4.653 

4.874 


5.036 

4.878 


4.646 
4.650 


4.405 




4.619 






Average for year 


5.345 


4.972 


4.765 


4.957 


4.649 


4.515 







New York, Nov. 4, 1912. 



Willett & Gray. 



Mr. Fordney. When I want you to quote prices I will ask you. I 
am probably quite as familiar with them as you are. 

Mr. Shackleford. For the benefit of the committee, I hope only 
one witness will testify at a time. 

The Chairman. Let him put the figures in the record for the benefit 
of the committee. 

Mr. Lowry. I have handed them to the reporter. 

Mr. Fordney. All right, put them into the record; but, at the 
same time, I want my question answered. Beet sugar was offered 
on the market on the 12th day of October, according to the testimony 



92 STJGAE AT A SECOND GLANCE. 

given before the Hardwick committee, and at $5.50 per hundred 
pounds 

Mr. Lowry (interposing). That 

Mr. Fordney (continuing) . Let me put my question. And within 
a very few days thereafter refined sugar in New York dropped from 
1\ to 5.75 cents. Is that not true? 

Mr. Lowry. It did drop from 7J to 6.75 cents. 

Mr. Fordney. Is it not true that there was testimony furnished 
here by affidavit, as a part of the statistics of the Treasury Depart- 
ment, that the average price of raw imported sugar during that year 
and during that period was 2.74 cents in bond in New York? 

Mr. Lowry. No ; it was not that 

Mr. Fordney. Whereas your prices for refined sugar were quoted 
on prices for European raws, and there was not a pound of European 
raws coming into this country ? 

Mr. Lowry. This 1911 we are talking about 

Mr. Fordney (interposing). Is that not true? 

Mr. Lowry. The average margin between raw and refined sugar in 
1911, according to Willett & Gray, was $0.89 per hundred, a normal 
margin. 

Mr. Fordney. What raws are you talking about ? 

Mr. Lowry. The difference between the duty-paid value of raw 
sugar and the refiners' selling price. That shows the margin between 
raw and refined for that year was nothing more than normal. 

Mr. Fordney. European raws, you are talking about? 

Mr. Lowry. No ; the raw sugar actually received. 

Mr. Fordney. Your prices for the year, you say, are based upon 
European raws quoted on the market and as furnished by Willett & 
Gray? 

Mr. Lowry. I beg pardon. The price of refined sugar during that 
year was based upon the price that refiners were paying for raw 
sugars plus the margin which covered the cost of refining, as it 
always is. 

Mr. Fordney. Mr. Chairman, I want to state now that in the Hard- 
wick hearings you will find the price of refined sugar in New York in 
July, August, and September, 1911, was based upon European raws, 
and that I now file and put into this record a statement showing that 
the price for raws during that time was $2.74, less the duty, and yet 
that refined sugar sold as high as 7 J cents per pound in New York, and 
that when beet sugar was put on the market in October, 1911, New 
York refined sugar dropped to 5.75 cents. The following was put in 
the record by Mr. Fordney: 

Mr. Fordney. * * * I want to know what the Federal Sugar Refining Co. sold 
sugars for? 

Mr. Lowry. The Federal Sugar Refining Co. and other refineries on July 6 advanced 
their price from 5 to 5.1. * * * Now, the market advanced right on up to 6.75, 
and the trade kept buying on each successive advance. * * * The demand came 
on to us so fast we could not take care of it and we went to 7 cents. Arbuckle & Co. 
were delivering promptly, and they went to 7 cents. We were about 10 days oversold 
at the time, and Arbuckle was the only refiner prepared to give immediate delivery, 
and he jumped his price to 7.5. * * * We wanted to keep in the market and 
supply our customers right along, and we put the price at 7.25, and at 7.25 the market 
stopped, and from that time on, whether we talk about beet sugars or cane sugars, the 
market became absolutely a jobber's market. The beet-sugar price was 6.5 cents. 



SUGAR AT A SECOND GLANCE. 93 

Mr. Lowry. Is the object of that question to show that beet-sugar 
men sell their sugars at a lower price than they can get for them in the 
market? 

Mr. Fordney. They did that year, did they not? 

Mr. Lowry. There never was any charity business that year, and 
never was in any year. 

Mr. Fordney. Did they not put beet sugar on the market at $5.55 
when you were selling at 71 cents in New York? 

Mr. Lowry. No, sir. 

Mr. Fordney. I say the record shows that is the testimony. 

Mr. Lowry. I say the record in incorrect, then. They sold these 
sugars in August for $5.55, when our price was $5.65. 

Mr. Fordney. I am not talking about beet sugar on the market in 
August, but it was in the record that way. There was no beet sugar 
at all put on the. market in August, and 

Mr. Lowry (interposing) . The price of 

Mr. Fordney (continuing). Let me take just a minute and finish 
my question. They put sugar on the market in October, 1911, and 
then when you dropped your price from 71 to 5.75 cents they put their 
sugars on the market at 5.55 cents and when you were selling at 71 
cents. Is that not a fact ? 

Mr. Lowry. If you will look in the record of the Hardwick com- 
mittee investigation 

Mr. Fordney (interposing). Is that not true? 

Mr. Lowry. You will find that the price for domestic beet sugar 
followed the market as it always has and advanced or declined as 
world's values advanced or declined. You will find on page 3372 of 
the Hardwick hearings testimony to show that from the high point 
reached in September until the early part of December the London 
sugar market declined 2s. 9d., or 66 cents, a hundred pounds, and 
that American beet sugar during the same period dropped 60 points 
from their high figure. 

Mr. Fordney. Mr. Lowry, you stated a few minutes ago that 
refined sugar sells on the Pacific coast at a higher price than in the 
East? 

Mr. Lowry. Yes. 

Mr. Fordney. Is it not true that the sugar imported on the Pacific 
coast to be refined is practically all free sugar coming into this country ? 

Mr. Lowry. All sugar used on the Pacific coast is free sugar, either 
being domestic beet or domestic cane or Hawaiian sugar. That is 
what I said in my testimony. 

Mr. Fordney. From Hawaii or the Philippines? 

Air. Lowry. Well, from the Philippines; a trifle; not very much. 

Mr. Fordney. That sugar is not refined by the sugar-beet men ? 

Mr. Lowry. No; it is refined by the Western refinery and the 
C. & H. refinery. They both take advantage of the tariff in the same 
way. 

Mr. Fordxey. In the American Sugar Refining Co. ? 

Mr. Lowry. No; I understand the American Sugar Refining Co. 
now state they have no interest in the Western Refining Co. They 
had up to about a year ago, I think; and since the American Sugar 
Refining Co. has no control of the Western Refining Co. it may be 
fair to state that they have got the price higher than for a year or so 
previously as compared with the New York price. 



94 SUGAR AT A SECOND GLANCE. 

Mr. Fordney. According to your own statement, consumers of 
sugar on the Pacific coast are paying more for their sugar than con- 
sumers of sugar on the Atlantic coast, whereas raw sugar comes in 
free on the Pacific coast and pays a duty on the Atlantic coast ? 

Mr. Lowry. They pay more for sugar that does not pay any 
revenue to the Government. 

Mr. Fordney. Then, the tariff has nothing to do with the price 
which the consumer has to pay? 

Mr. Lowry. Yes, sir; it has everything to do with the price the 
consumer has to pay out there, as their price is based upon the in- 
bond value of foreign sugars, plus the duty and cost of refining and 
not upon the cost of production. 

Mr. Harrison. Was not the effect of admitting Hawaiian sugar 
there merely to raise the price of Hawaiian sugar to the level of the 
price of sugars in this country? 

Mr. Lowry. Precisely. 

Mr. Harrison. In other words, the tariff wall was not opened up 
wide enough to let in enough world competition to lower the price ? 

Mr. Lowry. Exactly. They just let in a small amount, and that 
let in took advantage of the tariff and boosted their price. 

Mr. Fordney. If that were the case and you put sugar on the free 
list the consumer on the Atlantic coast would not get any advantage; 
you would just hold up the price ? 

Mr. Lowry. Mr. Fordney, there are any number of gentlemen in 
this room representing the domestic industry who are prepared to 
testify that if you take the duty off sugar there will be a corresponding 
reduction in the price of sugar to the consumer, and that is why they 
don't want it done. If you will refer to the HardwJck Committee Hear- 
ings, pages 3547 and 3554, you will find that Mr. Willett of Willett & 
Gray gave a very clear example of the effect of the tariff on the price 
of sugar. He stated: 

' "All the analyses of changing from duty to free sugar show that 
whenever duty is taken off the cost of refining decreases, and when 
the duty is added the cost of refining increases, but these analyses 
also show that whenever duty is taken off the consumer gets the full 
benefit of the amount of duty taken off and also a part of the lower 
cost of refining, and whenever the duty is increased the refiners bear 
a certain portion of the increase and the consumer does not pay the 
full addition of the duty." 

And on page 3554 the following passage occurs: 

"I would like to have the committee satisfied that any reduction 
of the duty goes to the consumer and any addition of the duty is paid 
by the consumer in any year under any duty which differs from any 
other duty, making necessary allowances for market fluctuations 
affected by supply and demand." 

Mr. Fordney. I was simply following out the logic of your con- 
tention and not stating what I believed. But just let me ask you a 
question along that line: When you had the opportunity, when you 
had a clear field, when there was no domestic beet or cane sugar on 
the market in 1911, in what way did you apply your philanthropic 
ideas to the consumer ? 

Mr. Lowry. We never had a clear field in the selling of sugars. 
What difference does it make whether we compete with cane or beet 
sugar ? 



SUGAK AT A SECOND GLANCE. 95 

Mr. Fokdney. You stated a few minutes ago that because of the 
higher cost of production of beet sugar a higher duty was demanded 
by manufacturers of beet and cane sugars ? 

Mr. Lowry. That seems to be the object of putting the cost higlL 

Mr. Fordney. Has it not been shown here that since the beet-sugar 
industry began in this country the cost of production has been mate- 
rially lowered ? 

Mr. Lowry. And their profits materially increased — correspond- 
ingly increased. 

Mr. Fordney. That is not what I asked you. I asked you if the 
cost of production has not been materially lowered ? 

Mr. Lowry. I should think it would be; and here we have an indi- 
cation of the domestic producers' greed. Ten years ago they urged 
that if they could only have 10 years of the present basis of tariff 
bounty they would be prepared to work under lower tariff rates. 
They have had those 10 years and, although we find them much 
fatter than 10 years ago, they still stick their forefeet comfortably 
in the tariff trough and are unwilling to make any concession to the 
consumer by removing even one of those feet, notwithstanding the 
fact that even you admit that during this period they have very 
materially reduced their cost of operation. 

Mr. Fordney. Is it not true that every particle of legislation since 
that time affecting sugar has been to lower the tariff on sugar ? 

Mr. Lowry. Well, there has been practically no legislation to lower 
the tariff since the bill of 1897, with the exception of 20 per cent rate 
on Cuban sugars, a part of which the Cubans get and a part of which 
the consumer in the United States gets. 

Mr. Fordney. Mr. Lowry, let me 

Mr. Lowry (interposing). On this point let me say 

Mr. Fordney (continuing). Let me get this straight while I am 
at it 

Mr. Lowry. This clears it up 

Mr. Fordney (continuing). It is true that since the sugar-beet 
industry began in this country the duty on sugar from Cuba has 
been lowered 20 per cent? 

Mr. Lowry. Yes. 

Mr. Fordney. Is it not also true that Porto Rican sugar comes in 
free since that time ? 

Mr. Lowry. Yes. 

Mr. Fordney. Is it not further true that Philippine sugar comes 
in free since that time ? 

Mr. Lowry. Up to 300,000 tons. 

Mr. Fordney. So that it is true, as I stated in my former question, 
that every particle of legislation affecting the duty on sugar since 
the beginning of the beet-sugar industry in this country has been to 
lower the duty and increase competition with free sugar or sugar 
bearing lower rates ? 

Mr. Lowry. The legislation has been toward giving the Philippines, 
Hawaii, and Porto Rico the benefit of our high-tariff wall. 

Mr. Fordney. Even if you prefer to put it that way, that is all of 
the legislation there has been affecting sugar, so that my statement 
is true, is it not ? 



96 SUGAK AT A SECOND GLANCE. 

Mr. Lowry. We were talking a few minutes ago about the price 
of sugar 

The Chairman. If you will allow me to suggest right there, Mr. 
Fordney, do not overlook the fact that the American flag is floating 
over Hawaii, and that legislation affecting her production of sugar 
is not in fact a lowering of the high-tariff wall. 

Mr. Fordney. And I want to say to the chairman that we got 
sugar from Hawaii long prior to the period when the American flag 
began to fly over Hawaii. 

The Chairman. I understand, but Hawaii is a part of this country, 
and in speaking of Hawaiian sugar coming in free, I thought your 
statement might be misunderstood. 

Mr. Fordney. I am not referring to Hawaii, or at least I did not 
bring it up; the witness did. 

Mr. Lowry. As an indication of the effect on the market of beet 
sugar, which comes on the market in the fall, let us take the prices 
for the last six months and the first six months of the following years 
and compare them: 

1911 : Per 100 pounds" 

Average from January to July $4. 72 

Average from July to December 5. 96 

Average for the year 5. 34 

Which was higher, as you will notice, during the last six months. 

1910: Per 100 pounds. 

Average from January to July $5. 05 

Average from July to December 4. 92 

1909: 

Average from January to July 4. 65 

Average from July to December 4. 87 

Average for the year 4. 76 

1908: average from January to July 

Mr. Fordney. To expedite matters you can put that in the record. 

Mr. Lowry. I believe it is in. It shows that for the six years com- 
pared three of the years sugar was higher during the last six months 
and during three years it was a trifle lower. It shows that beet sugar 
follows the markets of the world. 

Mr. Fordney. Is it not true that domestic beet sugar sold in 
New York this fall cheaper than your price ? 

Mr. Lowry. Yes; and cheaper than it did in Colorado. It sold in 
Colorado for 5.20, whereas it was shipped to New York and paid 
freight charges 80 cents and there sold for 4.6 cents per pound. 

Mr. Fordney. It sold for a less price in New York than you were 
selling your sugar for, and you were obliged to close you factory on 
account of it ? 

Mr. Lowry. No; not at all. 

Mr. Fordney. Did you not stop sales ? 

Mr. Lowry. No; why, gracious me, no. They have sold — oh, well, 
I don't know how many carloads they have sold — but certainly not 
enough to close our factory. But when the people of Colorado were 
paying a higher price they 

Mr. Fordney (interposing) . Just answer my question. I know you 
very well. 

Mr. Lowry. I expect you do. 



SUGAK AT A SECOND GLANCE. 97 

Mr. Fordney. You are wound up for all time to come. When you 
sold sugar for 4.90 cents in New York the domestic beet sugar under- 
sold you this fall, did it not ? 

Mr. Lowry. They have to or they would not sell it at all. 

Mr. Fordney! Did they not do it ? 

Mr. Lowry. Yes; 10 cents per hundred. You know that beet sugar 
never sells for the price received for cane sugar, because the trade will 
not pay the same price for it. 

Mr. Fordney. Oh, my friend 

Mr. Lowry (interposing). You understand that that is so? 

Mr. Fordney. I understand that you are a very resourceful arguer- 
[Laughter.] 

Mr. Lowry. Thank you. 

Mr. Fordney. You stated in your remarks a few minutes ago that 
the production of sugar in Louisiana was a great detriment to the 
people there, I believe ? 

Mr. Lowry. I say that that is the statement many people in 
Louisiana make. 

Mr. Fordney. The statement was made before the Hardwick com- 
mittee by a gentleman from Louisiana that more than half of the 
people of the State of Louisiana were now directly engaged in the 
production either of cane or cane sugar ? 

Mr. Lowry. I do not know anything about their statements on the 
subject. 

Mr. Fordney. Well, that was the testimony. 

Mr. Lowry. But I do know that the claim is made that Louisiana 
would be far better off if they would cut the area of the State up into 
small farms and get away from the big plantation idea and produce 
other crops. 

Mr. Fordney. That is the claim of the free trader, is it not, and 
not of the sugar grower or manufacturer down there ? 

Mr. Lowry. No, sir; that is the claim of people in Louisiana who 
have no interest in the matter so far as I know. 

Mr. Fordney. You never heard a man engaged in the production 
of cane sugar in Louisiana make that statement ? 

Mr. Lowry. No; not any man engaged in the production of cane 
sugar, but by people there who know the conditions. Yes; I have 
heard people in the business say so, but they were not engaged in 
production of cane sugar. 

Mr. Fordney. Are you secretary and treasurer of this wholesale 
grocers' association yet ? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. You stated before the Hardwick committee that 
there were no fees or annual dues or dues of any kind charged to mem- 
bers of your association ? 

Mr. Lowry. Yes, sir; and the situation is precisely the same as 
when I stated it to the Hardwick committee and to the Finance Com- 
mittee of the Senate. 

Mr. Fordney. None collected from the members of that associa- 
tion? I, 

Mr. Lowry. That is right. They contribute work only. 

Mr. Fordney. You stated that there was never a meeting held of 
even two or three members of the committee ? 

S. Doc. 23, 63-1 7 



98 SUGAR AT A SECOND GLANCE. 

Mr. Lowry. No; but there have been meetings, as I see these 
people frequently. 

Mr. Fordney. I know that you represent them and write them and 
go around and see them occasionally. 

Mr. Lowry. Yes, sir. 

Mr. Fordney. So that there is a meeting of at least two members 
when you and another fellow are together ? [Laughter.] 

Mr. Lowry. I think that is correct. 

The Chairman. Order, gentlemen. 

Mr. Fordney. You stated further to the Hardwick committee that 
the only money you had ever had contributed for this effort to secure 
free sugar had been given by Mr. Spreckels, president of the Federal 
Sugar Refining Co., some $12,000? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. Does that continue ? 

Mr. Lowry. Yes, sir; no change in the situation. 

Mr. Fordney. So that all of the money produced for your use in 
advertising comes from the Federal Sugar Refining Co., or its pres- 
ident ; is that right ? 

Mr. Lowry. Yes, sir; that is right. And right here I will put into 
the record a statement that I gave to Chairman Hardwick of the 
Special Committee Investigating the American Sugar Refining Co., 
and which he incorporated in his speech, showing exactly who our 
committee was, what it was, and what it stood for. 

Mr. Hardwick. Mr. Chairman, before I proceed to a discussion of another branch 
of this question I wish to insert in the record, as a matter of simple justice to him, a 
letter from a gentleman who has been previously assailed in this debate by opponents 
of this bill, and who has been severely criticized all over the country by the bene- 
ficiaries of the sugar tax. It seems to me that these gentlemen think that it is per- 
fectly proper for any gentleman to favor a retention of duties for the "protection" of 
the industry in which he is interested and conduct as active and as aggressive a 
propaganda to save his "protection" as he may desire, but that it is hardly short of 
a crime for anybody who speaks for the millions of American consumers and urges a 
reduction of tariff burdens to conduct a propaganda in support of that view. The 
gentleman to whom I refer has, in my judgment, done a great work for the people of 
the country by his aggressive and forceful advocacy of the removal of the duty on 
sugar, and while he has necessarily earned the ill will of the protected interest, because 
of his aggressive fight, he is undoubtedly entitled to the gratitude and the good will of 
every American consumer who has a grocery bill to pay. I refer to Mr. Frank C. 
Lowry, of New York, sales agent for the Federal Sugar Refining Co., and secretary of 
the committee of wholesale grocers, and I invite the attention of the committee to 
the letter from him, which follows: 

New York, March 18, 1912. 
Hon. Thomas W. Hardwick, 

Chairman Special Committee on Investigation of 

the American Sugar Refining Co., and others, 

House of Representatives, Washington, D. C. 
My Dear Sir: Those opposed to any reduction in the tariff on sugar have endeav- 
ored to besmirch the standing of the committee of wholesale grocers, of which I have 
served as secretary, because I am also in charge of the sales department of the Federal 
Sugar Refining Co., an independent refinery. There has at no time been any mystery 
as to who I was or where I stood on this important matter. Certainly I was very 
glad to have the opportunity to state it clearly to your committee when I appeared 
before them last July. The wholesale grocers' committee was formed in 1909 for 
the purpose, as stated on our letterheads, of "obtaining cheaper sugar for consumers 
through reduction of duties on raw and refined sugars." I believed in the principle 
advocated, was instrumental in forming this committee, and have served as its sec- 
retary without any remuneration, direct or indirect, because the other members 
desired it. My name, and that of the other members of the committee, has appeared 
on all our stationery. We have been particularly careful about this, so that all might 



SUGAK AT A SECOND GLANCE. 99 

know exactly who was behind the movement. Had there been any desire on my 
part or that of the other members of the committee to conceal the fact that I was inter- 
ested in this work, this would not have been done. 

With the exception of myself all our members are actively engaged in the wholesale 
grocery business. They are: Carl Schuster, Koenig & Schuster, New York City; 
W. H. Baker, Baker & Co., Winchester, Va.; B. F. Parsons, Parsons & Scoville Co., 
Evansville, Ind.; H. C. Beggs, Dilworth Bros. & Co., Pittsburgh, Pa.; R. E. Collins, 
Collins & Co., Birmingham, Ala.; A. S. Hammond, Monypeny-Hammond Co., Colum- 
bus, Ohio; G. Thalheimer, Syracuse, N. Y.; Henry Baden, Henry Baden & Co., Inde- 
pendence, Kans.; F. J. Dessoir, R. C. Williams & Co., New York City; H. T. Gates, 
E. W. Gates & Co., Richmond, Va.; W. E. Small, the A. B. Small Co., Macon, Ga.; 
E. L. Woodward, E. L. Woodward & Co., Norfolk, Va. ; A. Blanton, A. Blanton Grocery 
Co., Marion, N. C; Jacob Zinsmeister, J. Zinsmeister & Sons, Louisville, Ky.; A. 
Brinkley, A. Brinkley & Co., Norfolk, Va.; R. E. Bentley, Bentley, Shriver & Co., 
Baltimore, Md.; John E. Talmadge, jr., Talmadge Bros. & Co., Athens, Ga.; Isaac 
Horner, Henry Horner & Co., Chicago, 111., Edward Cumpson, T. & E. Cumpson, 
Buffalo, N. Y.; E. P. McKinney, Mc Kinney & Co., Binghamton, N. Y.; H. Y. McCord, 
McCord-Stewart Co., Atlanta, Ga.; A. S. Webster, Webster Grocery Co., Danville, 111. 

These gentlemen are from 14 different States, and the firms represented have a total 
rating of nearly $8,000,000. 

In the work we have been doing we have had the cooperation of a great many whole- 
sale and retail grocery houses that are not members of the committee, but who would 
be glad to become members of it were it desirable to have the number increased. 
Furthermore, I am firmly convinced that 90 per cent of the wholesale grocery trade of 
the country is in sympathy with our efforts. The National Wholsale Grocers' Associa- 
tion, as an organization, has not taken any action regarding the tariff on sugar, for the 
reason, as they have repeatedly stated, "as an organization we do not deal with 
political questions of any kind." They leave matters of this kind to be dealt with 
separately by the various local organizations and individual members, and the peti- 
tions now filed with the Ways and Means Committee show how thoroughly this haa 
been done. I might mention, however, that the National Canners' Association, with 
a membership of over 3,000 firms, does not feel this way about it, but passed resolutions 
favoring a lower duty on sugar, and have instructed the chairman of their committee 
on legislation, Mr. Bert N. Fernald, to use his best efforts to bring about such a reduc- 
tion. The National Bottlers' Protective Association have acted in a similar way, the 
only difference being that their resolution calls for "free sugar." 

Previous to the time this committee was formed, in 1909. the general public knew 
little regarding the details of the sugar tariff, and all our efforts have been along the 
lines of publishing the facts, feeling satisfied that if the people were informed what the 
tax was and its effect they would demand and receive the relief from the excessive 
rate to which they are clearly entitled. As a result of our efforts thousands of petitions 
asking for a reduction in the tariff on sugar have been sent to Congressmen signed by 
individuals, firms, corporations, granges, civic associations, etc. Through these the 
signers have spoken for themselves and others who are in sympathy with the move- 
ment. These are the people who will hold their Congressman responsible for what he 
does or does not do to secure a lower tax rate on sugar. 

To distribute this information, besides requiring effort on the part of this committee, 
required funds, and the Federal Sugar Refining Co. has helped us financially. Inves- 
tigation by your committee disclosed that the Federal Sugar Refining Co. was abso- 
lutely independent, having no affiliation, directly or indirectly, with the Sugar Trust. 
Consequently their interest in the lower duties is identical with that of the consumer. 
A lower tariff rate will reduce the price of sugar, resulting in an increased consumption, 
so that a larger business can be done at a reduced expense. 

The American Sugar Refining Co. is clearly on recored as desiring no change in the 
present tariff, as reference to the Payne-Aldrich tariff hearings of 1909, pages 3430- 
3440, will disclose a letter and a brief filed by them, urging that the present tariff rate 
be maintained. Thus the line is clearly established with consumers, manufacturers, 
dealers, and independent refiners desiring lower duties, and opposed to this is the 
Sugar Trust and their allies, the domestic sugar producers. 

As this committee think it should be clearly stated exactly who we are and also that 
the work we have done has been because we believe in the principles advocated, and 
for no other reason, we would appreciate if you can arrange to have this printed in the 
record . 

Very respectfully, yours, Frank C. Lowry, Secretary. 



100 SUGAK AT A SECOND GLANCE. 

Mr. Fordney. Why, there is not a Congressman nor a dealer in the 
country to-day who has not got a copy of that. 

Mr. LowrY. I am glad to know that, because I have certainly been 
engaged in an effort to get it into their possession. 

Mr. Fordney. Why, of course. You send it out with practically 
every barrel of sugar or package of sugar that you send out, unless 
the purchaser objects to it. 

Mr. Lowry. No; that list was never sent out with any sugar. 

Mr. Fordney. You send out letters, do you not, and make appeals 
for free sugar? 

Mr. Lowry. We send out statements showing it would be to the 
interest of the consumer; yes. 

Mr. Fordney. That is, that in your opinion, it would be ? 

Mr. Lowry. Well, we can not do any more than that. 

Mr. Fordney. Mr. Lowry, you stated that the labor cost in the 
production of sugar has nothing to do with the cost of sugar ? 

Mr. Lowry. I say that the price of domestic sugar is not arrived at 
by taking their bases of cost and adding a fair margin to it. 

Mr. Fordney. No; you did not say that. 

Mr. Lowry. Well, I will read what I said. 

Mr. Fordney. Well, I would rather have the clerk to read it. 

Mr. Lowry. Let the clerk read it. He took it from the printed 
pamphlet, I believe. 

Mr. Fordney. I will waive that point. 

Mr. Lowry. You are so unsuspicious when the beet-sugar man is 
on the stand that I am surprised you should be so suspicious now. 

Mr. Fordney. I am suspicious of you and know you. 

Mr. Lowry. Yes; and I have proved several of your statements 
incorrect. 

Mr. Fordney. I have had from you a volume of this stuff you are 
putting into the record. I could not read it in a week if I were to 
make a great effort, there is so much of it. You are all right and very 
proper, and fighting hard for free sugar. You have your reasons 
therefor. Now, then, you stated that the labor cost in the produc- 
tion of beet sugar practically had nothing to do with the price at 
which that sugar was sold? 

Mr. Lowry. I said it was a very small item in the cost of produc- 
tion. 

Mr. Fordney. Why, does it not take labor to raise beets and to 
convert beets into sugar, and is not the same thing true of cane ? 

Mr. Lowry. I said in the factory. You settled the farming end of 
it when you put beets on the 10-per cent basis. You admitted beets 
as a farmer's product needed a protection of only 10 per cent, and I 
object only to the factory receiving over 70 per cent protection as it 
does under the present rate. 

Mr. Fordney. Which "you" are you speaking of now? 

Mr. Lowry. I speak of "you" as yourself and the party you repre- 
sent, the Republican Party. On this matter you personally urged 
that. I am not sure about it, but you can say whether it is true or not. 

Mr. Fordney. If you knew all about it you knew that that is 
not so. 



SUGAK AT A SECOND GLANCE. 101 



Mr. Lowry. You did not- 



Mr. Fordney (interposing): If you knew all about it you know 
that the rate fixed in the House was 25 per cent, the same as the 
Dingley law, on edible vegetables, and was lowered in the Senate. 

Mr. Lowry. I see. I thought perhaps you had something to do 
with those conferences, but it is immaterial. It does not make any 
difference. The correctness of their judgment has been proven. 

Mr. Fordney. I did. I was on the conference committee; yes, sir. 
Is it not true that wages both in the beet fields and in the sugar 
factories of this country are much higher than they are in Europe — in 
Germany and France, for instance? 

Mr. Lowry. That might be an argument if this was true for paying 
the farmer more, but the farmer does not get more. 

Mr. Fordney. The farmer does not get more what? 

Mr. Lowry. The farmer does not get more for his beets than the 
farmer in Germany does. 

Mr. Fordney. I know that you filed with the Hardwick committee, 
and to end this argument I will explain that you stated the farmer in 
Germany got more per ton for his beets than the farmer in this 
country got for his beets in general. You had in mind the co- 
operative plan 

Mr. Lowry (interposing): No; I did not. 

Mr. Fordney. If you did not, you do not know all about it ? 

Mr. Lowry. Well, I will file the German statistics on the subject. 

Mr. Fordney. All right. There are German statistics in the Hard- 
wick committee hearings, and the average price received for beets by 
the German farmer during the period 1905-1911 was $4.45 per ton 

Mr. Lowry. Oh, no; or that may be the case where the farmer sold 
his beets for $4.45 per ton and afterwards got something on the co- 
operative basis. 

Mr. Fordney. Wait a minute, and let me finish 

Mr. Lowry. We do not have to argue on that; here are the sta- 
tistics. 

The Chairman. Just file those statistics. 

Mr. Lowry. I also have statistics showing the prices in 1911. In 
our own country our farmers got $5.50 per ton and the German farmer 
$5.54. The German statistics show that the price for sugar beets in 
Germany last year averaged $6.07 per long ton. 

The Chairman. Just place those in the record with your remarks. 

Mr. Lowry. All right. So that there could be no possible question 
on this subject, I have secured and have before me the quarterly book 
of statistics of the German Empire, issued by the Imperial Bureau of 
Statistics. This you can procure by writing to any of the United 
States consuls in Germany. It shows that the average price paid the 
farmer for sugar beets in Germany for the years 1909-10 was $5.29 
per long ton; for 1910-11, $5.44; 1911-12, $6.07. F. O. Licht, the 
recoguized sugar statistician in Europe, advises me that " conditions 
in otner European beet-sugar countries did not differ much from those 
in Germany/' and states that "we might add for your information 
that the beet growers in Europe receive other returns for their beets 
besides cash, viz, they are furnished with beet seed free of charge" 
(in the United States the farmer buys his beet seed from the factory), 
" they receive allowances for freight and get 40 to 60 per cent of the 
pulp returned to them without charge." In the United States no 



102 SUGAK AT A SECOND GLANCE. 

pulp is returned to the farmer without charge, but this by-product of 
the factories is sold to the farmer and nets the factory a very nice 
return. I would call your attention to the fact that our own Depart- 
ment of Agriculture in its annual report estimates the average value 
of sugar beets to the farmer in the United States for 1911-12 at $5.50 
per short ton. As the beet-sugar factories in the United States may 
tell you that they are now paying much more for their sugar beets than 
formerly, I would call your attention to the fact that the sugar content 
of the beets in the United States is greater than it formerly was, and 
also to the fact that prices for sugar beets in Germany have also ad- 
vanced. According to the German statistics the average price in 
Germany for 1900 was $4.76 per long ton, by which it will be noted 
that the average for the 1912 crop was $1.31 over the price paid in 
1900, showing a greater advance than in the United States 

Mr. Fordney. Is it not true that filed with the Hardwick committee 
there were statistics, furnished by the German Government, for a 
period of 10 years, as I remember, but at any rate for 8 or 10 years, 
showing that the average price paid by the factories in Germany was 
$4.45; and were there not similar statistics as to France, showing the 
French factories paid $4.05 per ton ? And except ■ 

Mr. Lowry. I do not know of any such statistics, but if so, they 
were wrong. 

Mr. Fordney. Mr. Chairman, I insist that the gentleman let me 
finish my question. Except where the farmer was a stockholder in a 
factory, and then he sold his beets at a given price, and when the 
dividends were paid, in order to get around payment of the corporation 
tax, they paid him an additional sum for his beets, which was, in fact, 
a profit on the business. That is the evidence before the Hardwick 
committee. 

Mr. Lowry. I do not know of any such statement. 

Mr. Fordney. And in the same time in the United States the price 
paid for beets was $5.50 to $6.91 per ton delivered at the factory. 
That is as far as I wish to go with you. 

Mr. Lowry. Mr. Chairman, how much time have we taken. These 
other witnesses want to be heard. 

The Chairman. Just one hour of your time has been consumed. 
Of course we have to take out the time consumed on cross-examina- 
tion. 

Mr. Lowry. We would stay here a week at that rate. 

Mr. Fordney. By the way, Mr. Lowry, you said the capitalization 
of the sugar-beet factories was largely water ? 

Mr. Lowry. I did. 

Mr. Fordney. Is there anything that has more watered stock than 
the concern you represent, the Federal Sugar Refining Co. 

Mr. Lowry. Yes, sir; and you must bear in mind that the Federal 
Sugar Refining Co. is not here for the purpose of asking that American 
consumers of sugar be taxed so that it may earn dividends on any of its 
stock. That is not the case as to the beet-sugar companies. 

Mr. Fordney. Wait a minute there. You are here attacking the 
sugar-beet industry; to ask that they be not protected to earn divi- 
dends on large blocks of watered stock, as you say. Your testimony 
before the Hardwick committee was that you had some $3,200,000 
paid in, out of a capital of $10,000,000 ? 

Mr. Lowry. What is the purpose of that line of questioning ? 



SUGAR AT A SECOND GLANCE. 103 

Mr. Fokdney. I am trying to show that the beet-sugar men could 
not be more greatly watered than your concern is admitted to be. 

Mr. Lowry. What has that to do with the tariff ? 

Mr. Fordney. That is what I say; but why did you mention it if it 
does not have anything to do with the tariff. You made the point. 

Mr. Lowry. It has a great deal to do in the beet-sugar man's case. 
He is asking for the privilege of taxing the American consumer for his 
special benefit, so that he may pay dividends on this excessive capi- 
talization. The Federal Sugar Refining Co. is not. They come to you 
frankly and say that they are willing to work without any protection 
and meet nonbounty-fed competition from anywhere in the world. 
Isn't that it? 

Mr. Fordney. I am not the witness — you are. 

Mr. Lowry. I do not know about that. 

Mr. Fordney. Can you state a single instance where there is more 
watered stock in the beet-sugar industry than you testified there was 
in your concern ? If so, I would like to have you do it. Two-thirds 
of your stock is water. 

Mr. Lowry. Right here I will file a statement showing the capital- 
ization and daily slicing capacity of the various beet-sugar factories 
in the country. I call attention to the fact that the cost of erecting a 
beet-sugar factory is based on $1,000 per ton of daily slicing capacity. 

(Note. — Statement referred to above will be found on page 39.) 

Mr. Fordney. You said the duty you recommend on sugar is 
higher than the duty collected by foreign countries generally ? 

Mr. Lowry. Yes. 

Mr. Fordney. The duty you recommend ? 

Mr. Lowry. The duty that gives a certain bounty 

Mr. Fordney (interposing). Let me get this right. I understood 
you to say that the duty you would recommend be placed on sugar, 
which is a reduction, is a higher rate than that collected by lots of 
foreign countries on imported sugar ? 

Mr. Lowry. That " collected" is higher than the "protective" 
rate. It is a favorite trick of the sugar growers and sugar men asking 
for protection down here. They add the consumption tax and the 
import tax together and then say this import tax of other countries as 
compared with our own is higher. 

Mr. Fordney. Mr. Lowry 

Mr. Lowry. If I might finish. For example, the import tariff in 
Germany is 47 cents on raw sugar and 52 cents on refined. The con- 
sumption tax in Germany is $1.50. 

Mr. Fordney. On what. 

Mr. Lowry. On all sugars. 

Mr. Fordney. On domestic and imported ? 

Mr. Lowry. Yes; so that on foreign sugars imported at 47 cents 
add $1 .50, or a total of $1 .97. But the domestic sugars must also pay 
the $1.50 tax, so that the protective rate is only a rate of 47 cents; 
and that was the rate arrived at by the Brussels convention as a 
proper protective rate. 

Mr. Shackleford. There is a difference between the consumption 
tax and the import tax, and both apply ? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. Does domestic sugar produced in Germany pay 
a tax? 



104 



SUGAR AT A SECOND GLANCE. 



Mr. Lowry. They pay the consumption tax. 

Mr. Fordney. All sugar pays the consumption tax? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. Whether domestic or imported ? 

Mr. Lowry. Yes, sir. 

Mr. Fordney. That is your opinion ? 

Mr. Lowry. Yes, sir; that is a fact. 

Mr. Fordney. The protection is 53 cents and not $1.98? 

Mr. Lowry. Fifty-two cents on refined and 47 cents on raw. 

Mr. Fordney. All right. 

Table Page 63. 

sugar in europe and the united states. 

This table is replete with errors, inaccuracies, and misrepresenta- 
tions. 

In the first place, it is subject to the criticism that it contains 
rather a hybrid collection of statistics. Beet-sugar production is 
given for the year 1910-1911, whereas statistics for the year 1911-12 
were entirely available. Statistics for sugar imports, exports, and 
consumption are given from August 31, 1910, to September 1, 1911, 
and retail prices in Europe are quoted for July, 1911, while an aver- 
age retail price in the United States is attempted to be arrived at by 
taking an arbitrary wholesale price of 4.90 cents per pound to which 
is added 0.79 cent as the alleged cost of sale and distribution in New 
York for the period between 1890 and 1907. Such a confused array 
of statistics seems extraordinary in the light of the fact that Mr. Pal- 
mer announces that they were compiled in July, 1912. 

As for the statistics themselves, the import and excise taxes are 
combined instead of given separately. The object of this is appar- 
ently to create the impression that the sum of the two taxes is the 
rate of protection accorded to the domestic industry abroad instead 
of merely the import tax which in all cases measures the degree of 
protection. Both domestic and imported sugars must respond to the 
payment of the excise or consumption tax. We submit herewith a 
table showing the amount of the import and excise taxes separately 
in the principal countries abroad so that the degree of protection 
accorded may be more readily understood. 

Import and internal-revenue taxes levied upon sugar in European countries. 



Import 
tax. 



Internal- 
revenue 
tax. 



Total both 
taxes. 



Austria-Hungary . 

Belgium 

Denmark 

France 

Germany 

Holland 

Italy 

Russia 

Spain 

United Kingdom . 



Cents per 

pound. 

0.52 

.52 

1.22 

.52 

.52 



2.44 

6.06 

3.94 

.40 



Cents per 
pound. 
3.50 
1.75 
.49 
2.37 
1.51 
4.92 
6.23 
2.50 
3.06 



Cents per 

pound. 
4.02 
2.27 
1.71 
2.89 
2.03 
4.92 
8.67 
8.56 
7.00 
.40 



SUGAE AT A SECOND GLANCE. 105 

The import taxes alone represent the protection accorded domestic 
production. All sugars, domestic as well as imported, must respond 
to the payment of internal-revenue taxes. 

While every civilized nation may levy a tax upon sugar, it is levied 
mainly for the purposes of revenue, and from a revenue instead of a 
protection standpoint. The United States is the only country that 
for revenue purposes leaves its domestic production untaxed. 

The import taxes of 40 cents per 100 pounds in England, 79 cents 
per 100 pounds in Switzerland, and 12 per cent ad valorem in Turkey, 
may properly be said to be levied for revenue purposes, as these 
countries import all of the sugar they consume and produce none; 
hence these last import taxes reach all sugar consumed. 

Prior to the Boer War, England imposed no tax of any kind on 
sugar, and the price was at times below 3 cents per pound, and the 
per capita consumption 110 pounds per annum. Owing to the neces- 
sity of revenue growing out of the expense of this war, she first placed 
a tax of 1 cent per pound upon the imports of sugar, which was re- 
duced to the present 0.40 cent per pound, and she is anxious to dis- 
pense with the tax entirely, on account of the dissatisfaction of her 
consumers, who have been accustomed to a lower price than the pres- 
ent retail price of 4 cents per pound. The methods of taxation of 
sugar adopted in various European countries illustrates that the taxes 
are scientifically levied for revenue purposes, while in the United 
States only import duties are imposed, primarily as a protection, and 
only incidentally as a revenue tax. This is unscientific, inasmuch as 
this form of taxation reaches less than half of the sugar we consume, 
though the sugar itself costs us more than twice the amount of the 
$53,000,000 annually collected in revenue as the domestic and tariff- 
favored sugar interests take advantage of the tax imposed upon the 
duty-paying imported sugars, to raise their price to the full extent 
of the duties imposed. If we changed our form of taxation, and im- 
posed a tax of 62 cents per 100 pounds upon refined, 60 cents per 100 
pounds upon 96° raw sugars, and a Cuban rate of 48 cents per 100 
pounds, we would raise $20,000,000 in revenue annually. If more 
revenue were required, we could add a consumption tax of 25 cents 
per 100 pounds, and raise another $20,000,000 per annum, which 
would be imposing upon sugar about all the burdens of taxation that 
it should be called upon to bear. An internal-revenue or consumption 
tax of 65 cents per 100 pounds in the United States would raise a 
revenue equal in amount to that which we now derive from imposing 
an import or protective rate of 1.90 cents upon refined, 1.685 cents 
upon duty-paying 96° test raw sugars, and 1.348 cents per pound 
upon 96° test Cuban sugars, and has the added advantage that it 
would increase the revenue with the increase in consumption; whereas 
under the present method of taxation, the revenue derived from sugar 
in 1907 was $62,000,000, as against $52,000,000 in 1911, and this 
decrease will continue to be apparent as domestic and tariff -favored 
production increases. Did we raise our revenue in accordance with 
the import and consumption tax basis of Germany it would amount 
to approximately $140,000,000 per annum; if Belgium, $160,000,000; 
if France, $220,000,000; Austria-Hungary, $300,000,000. In raising 
this amount of revenue per annum in these various forms, if we 
adopted the German rate, our price would be 10 cents per hundred 
less than now; if, in accordance with the Belgian rate, it would be 15 



106 SUGAR AT A SECOND GLANCE. 

cents per 100 pounds more; with French 90 cents per 100 pounds more, 
and the Austrian-Hungarian but $1.90 per 100 pounds more. But 
the reason for taxing sugars abroad do not exist here. They make 
use of these taxes for the purpose of raising revenue to support their 
large standing armies and defray the expenses incidental to the cost 
of royalty. The import and consumption tax rate for the United 
States proposed above would result in reducing the price of sugar 
to the consumer about 1 cent per pound, while raising $40,000,000 per 
annum. But with the income tax, by which it is expected to raise an 
annual revenue of $150,000,000, the necessity of imposing any tax 
upon this necessary of life will disappear. Aside from the fact that 
our present tax is unscientifically imposed, it is a burden upon the 
poorer people, and should be shifted from their backs to the shoulders 
of the well to do and prosperous, through the medium of such a tax. 

o 



LP3.J< 



